Annual Report Analysis Of Amcor Limited Essay

Question:

Discuss about the Annual Report Analysis of Amcor Limited.

Answer:

Introduction

The present assignment is related to the strategic management of the Australian company Amcor Limited which is currently engaged in the packaging industry. Strategic management is basically the formulation and implementation of the pre-decided objectives and steps taken by the top management of the company and analyzing the different environments in which the organization operates i.e. internal and external environment. Strategic management includes different forms of analysis i.e. Porter’s 5 forces analysis and Annual report analysis and Balance scorecard analysis.

Annual Report Analysis of Amcor Limited

Analysis of annual reports of an entity is very important for understanding the position of the company in the competitive environment. These reports are the basic source of information for any person who belongs to the external environment of the company like the investor who has to understand the company and sector. However, it is also necessary to form views on the management of the company and to analyze the financials of the company (Cowan and Deegan, 2011). There are 5 different things which should be analyzed while reading an annual report of a company which is as follows:

  1. Statement of Vision and mission of the organization: Vision and mission of an organization are very important in terms of annual report analysis. These statements are general and basic in nature and character. Visions are the long-term objectives of an organization. Goals of the organization can be analyzed by reading the statement of vision and mission. While on the other hand, Missions are the strategic partnerships for building future’s organization.
  1. Report of the Director: For the brief analysis of annual report of an organization one has to read the past 4 to 5 years director’s report to look over that whether the management has achieved the fixed and standard targeted revenue over the past years and whether the strategies and policies adopted over the years were favorable or not for the company.
  1. Information about the Corporate: one has to get the details of the bankers, directors, auditors and registered office of the company. However, the main things to look at are the designation of each member of the board and auditors position in the organization.
  1. Corporate governance report of the organization: For the detailed analysis of the annual report of an organization, one has to look at the corporate governance followed by the organization, detailed information about the background of company’s directors and independent directors, director’s attendance at the board meetings of the company, their remunerations as well as re-appointment post the completion of the terms (Morrish, et. al., 2011).
  1. Financial Statements: This section provides the brief and detailed information on the income statements, balance sheet, cash flow and financial schedules for the past two years. By analyzing these figures, one can get the help in checking the financial health of the organization.

Porter’s 5 Forces analysis of Amcor Limited

Amcor Limited is one of the leading and topmost Australian companies in the sector of materials. Here in this section of the report, the analyst analyzed Porter's 5 forces analysis of Amcor Limited, five forces that shape the strategies for a company. The Porter's 5 Forces are:

  • New Entrants threat
  • Buyer’s bargaining power
  • Existing players and competitors rivalry
  • Supplier’s bargaining power
  • Substitute products threat (Cirnu and TODORU?, 2015).

Amcor Limited Porter Five (5) Forces Analysis for Materials Industry

  1. New Entrants threat: New entrants in the industry bring innovation, and new styles and techniques of doing the things and they put some extra pressure on the Amcor Limited by lowering the prices of their product and reducing the cost also by giving new value propositions to their customers and the clients. The organization (Amcor Limited) has to face and tackle all the challenges and construct the effective restrictions to protect its competitive corner.
  2. Buyer’s bargaining power: Demand comes naturally from the buyers of a product. Buyers want and desire to purchase the best offers available by paying the minimum consideration for the product. This naturally puts the pressure on the profitability factor of Amcor Limited in the long-run. More powerful customer base results into the higher bargaining power to the buyers and also the higher the ability to seek the raising offers and the discounts (Cirnu and TODORU?, 2015).
  3. Existing players and competitors rivalry: Intense competition and rivalry among the existing players of the industry often results in lowering the prices and decrease in the average profitability of the industry. Amcor Limited is operating in a highly competitive and intense rival industry of material. However, this intense rivalry and competition do not take charge and fees on the average profitability of the Amcor Limited.
  4. Supplier’s bargaining power: All the organizations in the industry of materials purchase the raw material from a no. of various suppliers. Dominancy holding suppliers can lower the profit margin of Amcor Limited which they are earning in the market. Dominant suppliers in the industry use the authority to negotiate the prices from the organizations prevailing in the market (Morrish, et. al., 2011). The impact of this can be seen in lowering the average profitability of materials in the market.
  5. Substitute products threat: Industry of the material will suffer if a new product meets the same needs of the customer in various ways. Substitute product threat is high if it provides a value proposition which is entirely different from the current industry offerings.

Balanced scorecard analysis

Amcor Limited is the leading and topmost global packaging solutions supplying a wide-scoped range of flexible and rigid products of packaging. Amcor Limited is a large organization, having the profits of US$9.5 billion, also employee’s base of 200, and shareholder size of 66,000. It is also the world’s largest producer of bottles of Polyethylene terephthalate (PET).

Amcor Limited’s senior management is using the balanced scorecard to overlook the divisional and corporate performance, to motive all the staff members and employees of Amcor Limited and also as a tool and equipment for the improvement of the sustainability (Elijido-Ten and Tjan, 2011). Amcor Limited is also providing services in the material, packaging design, recycling, and testing. Amcor Limited is presently structured into a business group of three called as Rigid plastic, Flexible Packaging and tobacco and specialty packaging. The organization is having the competitors like Mondi PLC, Ball Corp, UPM Kymmene OYJ and Sealed Air Corp., however, the organization Amcor is committed to the packaging having the lightweight innovations which protect a thousand tonnes of resources of the earth and CO2 emission through the use of the less raw material. Raw material efficient use lowers the consumption of fuel for the product transportation (McGraw and Dabski, 2010). The company Amcor Limited operates strategically with partners throughout the whole value chain of the organization. Packaged products are transported than by the often complexes supply chain for the last and ultimate display and disposal by the global retailers. The life cycle of product packaging can still add the value in the product at the last, as a conclusion of the complexes recovery of the energy and recycling processes.

Conclusion

By this assignment, the analyst has showcased the overview of the materials industry. Details of Amcor Limited is also given in the report assignment. Annual report analysis is also provided by the analyst of the assignment. After the annual report analysis, the analyst analyzed Porter's 5 forces analysis of Amcor Limited and balanced scorecard analysis of the Amcor Limited. By the assignment, it was clearly analyzed that Amcor Limited is fulfilling all its mission and vision requirements and is operating in the market with an objective of standing and profitability in the industry.

References

Cirnu, D. and TODORU?, A.V., 2015. ECONOMIC PERFORMANCE AND ORGANIZATIONAL CHANGE. Annals of'ConstantinBrancusi'University of Targu-Jiu.Economy Series.

Cowan, S. and Deegan, C., 2011. Corporate disclosure reactions to Australia’s first national emission reporting scheme. Accounting & Finance, 51(2), pp.409-436.

Elijido-Ten, E. and Tjan, E., 2011. Sustainability balanced scorecard disclosures: An Australian investigation. CSEAR 2011 at University of Tasmania, Launceston, Tasmania.

McGraw, P. and Dabski, S., 2010.Corporate Social Responsibility Reporting in Australia's Largest Companies. Labour& Industry: a journal of the social and economic relations of work, 21(1), pp.390-409.

Morrish, S.C., Miles, M.P. and Polonsky, M.J., 2011.An exploratory study of sustainability as a stimulus for corporate entrepreneurship. Corporate social responsibility and environmental management, 18(3), pp.162-171.

Morrish, S.C., Miles, M.P. and Polonsky, M.J., 2011.An exploratory study of sustainability as a stimulus for corporate entrepreneurship. Corporate social responsibility and environmental Accounting management, 18(3), pp.162-171.

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