Harvey Norman Intangible Assets

Topics: Balance sheet, Retailing, Asset Pages: 15 (4674 words) Published: September 4, 2010
TABLE OF CONTENTS

Abstract2
Introduction2
Business description and main activities3
Harvey Norman Resources5
Tangible Resources5
Profit from continuing and discontinued operations6
Profit from property6
Sales at franchises7
Sales at company-owned stores8
Intangible Resources8
Computer software and licence property8
Goodwill9
Harvey Norman Invisible Balance Sheet10
Internal Capital11
External Capital13
Individual Competence14
Recommendations15
Conclusion17
Appendix19
Appendix 119
References20

Abstract
Harvey Norman is one of the biggest consumer electronic retailer in Australia (D Richard, 2010), well-known for its recognisable brand name and local community involvement, Harvey Norman had achieved steady growth since its establishment on 1982 with 195 stores nationwide and 69 stores outside Australia. The success of Harvey Norman can’t solely be attributed to its services performance as a retailer nor solely to its physical assets and property, this report will examine the structure and resources of Harvey Norman both physical and intangible with a focus on the latter, of importance are intangible resources that give competitive advantage from its individual competence, internal, and external capital, an invisible balance sheet will also be derived to put these intangible resources in perspective. Following that a recommendation for Harvey Norman management will be presented on sustaining its competitive advantage and growth through the management of intangible.

Introduction
It has been far-known that a company’s financial annual report has limitation as it does not have a detailed explanation on the true value of company’s intangible assets and resources. Sveiby suggests that as external shareholders, investors are willing to know on the true worth of the company; not just based on its financial calculation, but more towards its know-how capital, employees’ intelligence and experiences, internal company’s structure, external relationships and more importantly, the company’s revenue-generating resources. Nevertheless, it is only ‘what’s on the surface’ that gets measured in the annual reports such as office furniture instead of the employees’ knowledge. This report was developed to provide insights on the management of tangible and intangible resources of Harvey Norman Holdings Limited, with the latter being the more important highlight on this report. It will also provide details on the invisible balance sheet owned by the company by outlining some key invisible organisational resources. In the end, this report will offer recommendations to be implemented by the company to better manage its key intangible resources. By analysing and looking into these intangible resources, shareholders are in the hope to look for signals beyond the financial annual report and are to be given true indicators on the company and its staff’s production capability, stability, know-how capital and profit potential, on which their decision to sell or keep their shares are based on.

Business description and main activities
Harvey Norman Holdings Limited is a franchisor and an Australian public company, which has expanded internationally, including New Zealand, Ireland, Singapore, Malaysia and Slovenia (Annual Reports 2009). According to 2009 Insider Retailing article, the company is now ranked third on the Australia’s top 10 retailers and is the leading non-food retail chain in Australia. Within its franchising system, the company offers extensive products range, cutting edge technology, and market leadership in most product categories. Harvey Norman Holdings Limited grants franchises to independent business operators under three leading brand names, i.e. Harvey Norman, Domayne and Joyce Mayne. As at December 2009, there are 635 Harvey Norman, Domayne and Joyce Mayne franchisees in Australia (Company Profile 2009)

As stated in the company profile, the principal activities of the...

References: Atkinson, B, 2009, Australia Top 20 Retailers Ranking, Insider retailing, accessed 20 April 2010,
<http://www.insideretailing.com.au/Latest/tabid/53/ID/5551/Australias-top-20-retailer-rankings.aspx>
Canavan, G, 2008, Harvey Norman Holding Stocks (HVN), Sydney Morning Herald, accessed 21 April 2010,
<http://www.moneymanager.com.au/articles/2008/06/09/1212863542134.html>
Unknown, Why the Harvey Norman Franchise Operation is Flawed. 2009, Every Franchise News, Accessed 27 April 2010
<http://www.everyfranchise.com/articles/why-the-harvey-norman-franchise-operation-is-flawed-600.htm >
[ 2 ]. Sveiby, K Eric, 1989, The invisible Balance Sheet, accessed 15 April 2010,
[ 3 ]
[ 4 ]. Atkinson, B, 2009, Australia Top 20 Retailers Ranking, Insider retailing, accessed 20 April 2010,
[ 5 ]
[ 6 ]. Canavan, G, 2008, Harvey Norman Holding Stocks (HVN), Sydney Morning Herald, accessed 21 April 2010,
[ 7 ]
[ 18 ]. Harvey Norman implements automated purchase ordering process, 2010, Transport and Logistics News, Accessed 28 April 2010,
[ 19 ]
[ 20 ]. Richard, D. 2008, “Why Gerry Harvey is wrong and JB-Hi Fi right” , Smart Office, Accessed 21 April 2010, http://www.smartoffice.com.au/Business/Retail/B6X2M6S2?page=2
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[ 22 ]. Wang, F. 2009, Sink or Swim: A critical study of the success of the JB Hi-Fi business model, Ozbankers.com, accessed 22 April 2010,
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