Involvement Of Customers In Co-Creation – Strategic Analysis And Financial Performance Of Australian Listed Companies In Materials Sector

Strategic Analysis of Amcor Ltd

Discuss about the Involvement of Customers in Co-Creation.

Strategic analysis is a technique that’s used to assess the power, opportunities, weaknesses and threats of the organization or that is concerned within the business undertaking or project. Porter’s ‘five forces’ framework is a powerful strategic analysis device for enterprise-degree evaluation, competitive strategy evaluation and company method analysis of the corporation. It is a tremendous tools for know-how the forces which shapes the competition within the enterprise (Porter, 2008). This version also helps the company to regulate their strategy as per their competitive environment, which in the long run helps in growing the last earnings. The five forces of porter’s model are “danger of new Entrants, bargaining energy of providers, and Bargaining strength of shoppers, hazard from replacement products and rivalry a number of the existing players”.

The employer faces threats of latest entrants as the new entrants within the telecommunication area bring innovation and placed stress on the present corporations like Amcor Ltd. These entrants provide high opposition to the lower pricing approach and new fee proposition. However, the organization has managed this undertaking and constructs the successful barrier to maintain their competitive role. The telecommunication offerings agencies buy their raw fabric from several providers and these providers use their negotiating energy to get high prices (E. Dobbs, 2014). This, in addition, decreases the general profitability of the company. The organization tackles the bargaining electricity of suppliers by building an effective delivery chain with the high number of providers and with the aid of experimenting their layout of the product with the help of various strategies. The bargaining power of buyer additionally positioned excessive pressure at the organization. They want minimal costs for high-quality offerings. To tackle this electricity the business enterprise develops a massive base of customers with the aid of hastily innovating new merchandise and streamlining its sale and manufacturing manner. The profitability of enterprise additionally suffers because of the advent of substitute products or services which meets the same requirements of clients in distinctive methods. The hazard of the substitute product is high for Amcor Ltd enterprise because it offers the fee proposition to customers which is uniquely distinct than the organization’s gift services (Kristensson, et. al., 2008). In addition to this, the contention most of the existing companies within the telecommunication enterprise is also severe as it drives down the prices which decrease the revenue of the corporation. With a view to tackling the in-depth rivalry and threats of substitute services and products, the employer builds a sustainable differentiation and works on understanding the middle wishes of customers.

Strategic Analysis of BHP Billiton Ltd

BHP Billiton Ltd also faces the threats of new entrants within the industry and high bargaining energy of providers and buyers. With a view to tackle those problems, the organization is building excessive potential to spend their money on studies and improvement (Thompson and Macklin, 2010). The excessive investment in studies and development will make it tough for brand spanking new entrants to go into the dynamic enterprise (Billiton, 2016). To remedy the trouble of high bargaining energy of each suppliers and buyers, the organization is growing devoted providers whose organizations will entirely rely on the enterprise and is constantly operating on innovating new products that allow you to restriction the client’s bargaining energy. The employer is also going through high competition some of the present players and dealing with threats of alternative offerings (Billiton, 2012). The principal rival of the enterprise is Amcor Ltd. Which will resolve those issues, the employer is building a massive base of clients.

Amcor Ltd and BHP Billiton Ltd are both the listed companies of Australia. They operate in Materials sector. The financial performance of both the companies is measured by conducting an accounting analysis. The steps for performing accounting analysis are as follows:

• Identification of industry economic characteristics: BHP Billiton is engaged in the multinational mining, metals and petroleum activities and Amcor Ltd is engaged in the packaging activities for the food, beverages, health care, and tobacco industries.
• Identify Company Strategies: The strategy of both the companies is to increase the profit by increasing the sale of the product (Ganesan, 2007). BHP Billiton is the third largest company in the Australia in revenue and it wants to increase its market share.
• Financial Statement of Companies: Financial statement is prepared to present the position of the business in the present and past year. In 2017, BHP Billiton earnsrevenue of A$ 38285 and Amcor Ltd earns revenue of A$11832 (Kieso, et. al., 2010). The operating profit earned by the BHP Billiton in 2017 is A$6222 and the profit earned by Amcor Ltd is A$798.
• Accounting analysis of both the companies: The financial ratios of both the companies are as follows:

Accounting analysis requires the analysis of past performances of the company. The past performance of the company can be analyzed by using the financial ratio. The financial ratio of Amcor Ltd and BHP Billiton Ltd shows the performance of the company. By analyzing the ratio of both the companies, it can be said that the financial position of BHP Billiton is better in comparison to Amcor Ltd (Albert, et. al., 2014).

The evaluation of financial statement is necessary to determine the real value of the business. The business is affected by various factors and effects of these factors bring changes in the operations of the company. The financial statement is used by the users of financial statements and they took decisions on the basis of financial statement. The financial statement of Amcor Ltd and BHP Billiton Ltd is analyzed and it is clear that the financial statement of BHP Billiton has more value as the profitability is more in BHP Billiton Ltd in comparison to Amcor Ltd. The financial ratio of BHP Billiton is better and it also shows that the company has enough funds to repay its debts (Hilton and Platt, 2013). The shareholder’s equity of BHP Billiton is more than the Shareholder’s equity of Amcor Ltd. The profits of BHP Billiton are positive while the profits of Amcor Ltd are also positive but it is less the profits of BHP Billiton Ltd (Kew and Watson, 2010). The quality of the financial statement is good of both the companies but some improvements can be made in the financial statement of Amcor Ltd as they have to make certain changes while preparing its financial statement. The financial statement of every company is prepared by following the guidelines of accounting standards. The management of Amcor Ltd has to give more focus when they prepare financial statement of next year.

Amcor is the leading multinational packaging company in Australia and the company is continuously performing well in terms of profit from last few years. The company provides the dividend of 3.97% in current year, which indicates that it is also a good long term investment. The profit after tax of the company has shown a growth of fifty five percent and this solid performance of the company is the driver of the solid results. As per the company management, the company has also benefited from the restricting and acquisitions initiatives and the management is expecting that the company will deliver the constant growth in future. I think at this position when the shares of Amcor are changing hands and by looking at the overall industry trend, Amcor is a good option for long term investment. Given below is the graphical representation of Amcor share price detail of last one year.

The current share of Amcor is 14.10 AUD. If I will invest $25000 in the company today then I will get 1736 shares of the company (25000/14.10).

References

Albert, P.J., Werhane, P. and Rolph, T., (2014).Introduction. In Global Poverty Alleviation: A Case Book (pp. 1-11). Springer, Dordrecht.

Billiton, B.H.P., (2012). Working with integrity: Code of business conduct.

Billiton, B.H.P., (2016). Resourcing Global Growth: Annual Report 2015. BHP Billiton, Melbourne.

Davies, T. and Crawford, I., (2011). Business accounting and finance. Pearson.

Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Ganesan, V. (2007).An analysis of working capital management efficiency in telecommunication equipment industry. Rivier academic journal, 3(2), 1-10.

Hilton, R.W. and Platt, D.E., (2013). Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.

Kew, J. and Watson, A., (2010). Financial Accounting: An Introduction 3e. OUP Catalogue.

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2010). Intermediate accounting: IFRS edition (Vol. 2). John Wiley & Sons.

Kristensson, P., Matthing, J., & Johansson, N. (2008).Key strategies for the successful involvement of customers in the co-creation of new technology-based services. International journal of service industry management, 19(4), 474-491.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.

Thompson, P. and Macklin, R., (2010). The big fella: The rise and rise of BHP Billiton. Random House Australia.

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