Discuss Discuss about the Customer Experience and Corporate Reputation.
The company on which the study will be conducted in this assignment is AMP Limited. It is a company that produces financial services. The company has its offices in Australia and New Zealand, headquartered at Australia. The company mainly provides investment products, banking products such as home loans, savings accounts, investment products such as insurance. The company also provides financial advice to its customers. This is a 168 year old Australian company which is running on supposedly good terms. With the age of the company it can be understood that the company has been extremely successful. The company also holds the largest shares than any other Australian company. Despite of all these good terms, the company has recently been facing some management problems. This has led to very low earnings of the company as compared to other financial years. The share prices of the company have been falling and the outflow of funds have decreased.
The main aim of this research is to analyze the reasons that have resulted in this fall in the market for an old company like AMP Limited.
The research questions that can be framed to analyze the problems faced by the company are given below:
- Are the activities of the new chairman responsible for this lower cash flow and decrease in share prices issue?
- What factors are responsible for increasing the profitability of the firm?
Research methodologies are of two types – Qualitative and Quantitative. Qualitative analysis is the type of analysis in which people are interviewed and analysis is done on the basis of their statements. Quantitative analysis is usually numerical analysis in which data is collected from a primary source via questionnaire or from a secondary source such as company report, journal articles or company websites etc (Hill-Wilson and Blunt 2013).
Contextual analysis involves an observational study that researches the current trend within its own setting. The analysis will make utilization of different strategies for gathering information, which will be both qualitative and quantitative in nature (Valmohammadi and Beladpas 2014). Contextual investigation research will fill in as the examination strategy. Contextual analysis investigation essentially falls in the subjective research; however, it could likewise be connected inside the quantitative research worldview.
In this study, analysis will be done on the basis of secondary data and the study will be observational. The research objectives will be achieved by discussion of those factors within the company. The data has been taken from the annual report for the financial year 2016 and analyzed on the basis of that. The discussion will mainly involve charts and figures.
To run the data analysis, a little light has to be shed on the context of the data. The data figures are obtained from the annual report of 2016 of the company AMP Limited. The profit or loss in revenues of the company will be discussed and the reasons behind these results will be analyzed.
The five year summary of the data figures has been obtained from the annual report for the financial year 2016. The first variable that has been considered here is revenue. Revenue is actually the amount of money received by a company in a financial year. It includes the discounts and deductions of the products and services. Thus, this is the gross income of the company. The figures in the chart are in $m. It can be seen that the revenues earned by the company has been increasing gradually from 2013 to 2016. Thus, the gross income of the company has been increasing gradually.
The next variable that will be considered here is the gains or losses incurred from the company’s investments. It can be seen that in the past 5 years, the company did not suffer any loss from the investments but the gain has been the lowest in the year 2015. It has increased to a very little amount in 2016 ($8,567m) from that in 2015 ($8,483m).
The third variable of consideration is the profit or loss incurred by the company. It can be seen that, the profit of the company has been increasing gradually from 2013 to 2015. There has been a sudden fall in the profit in 2016. The company incurred a loss of around $344m in the year 2016. This has resulted in the fall in the share prices of the company.
The next variable that is considered is the total assets of the company. It can clearly be seen from the figure that that with the gradual increase in the total assets of the company, the value of assets has fallen considerably in 2016. From the value of around $139,708m in 2015, the value of assets has fallen to an amount of $14060m. This figure is a clear depiction of the amount of loss the company is incurring. The loss is so huge that they had to sell a lot of their assets to amend for the loss.
The investors in the company have decreased to a great amount as the share prices of the company has fallen to a great extent. The margins and the outflow of funds for the company has also decreased considerably. As a result of this, AMP is no longer the best company providing these services to the investors. Other companies such as an US hedge fund are making its way into the falling market of AMP. This has put a lot of pressure on the chief executive of the company. He is under tremendous pressure from his upper level seniors to resign. According to some analysts, the company will suffer from a slow car crash. Thus, if this slow outflow of cash and low share prices continue, it will not be long before the company crashes. With the crashing of market prices of the organization, investors have attacked Mr. Meller publicly. It is said that Catherine Brenner, the chairman of the company has organized this attack to scare the chief executive. Hi was not able to conduct his work properly. The chairman of the company used to be a former investment banker and has joined AMP after the sudden departure of the former chairman Simon Mckeon, who also used to the chancellor of Monash University. This attack on Mr. Brenner was extremely unfair and should not have been done by the new chancellor. According to the information received, an investor wanted to invest a huge sum of money for the company. With this investment the company was supposed to retrieve the huge loss they incurred in 2016. This investor wanted the chief executive Mr. Brenner to resign (ABC News 2017). Even, if this is the case, the action of the chairman was not welcome. This has led to a lot of disputes within the company. It can be said that this dispute is not good for the company and this will not be helpful to increase the share prices of the company or compensate the loss. To do this, the workers have to work harder and be unified. A big investor is needed but the workers are more important to provide the services provided by the company. If the chairman keeps on behaving like this, the company instead of making up for the loss will crash even more. Thus, it can be said that the actions of the new chairman and her way or running the company is not at all good and thus, it is one of the reasons for the market crash.
A Chicago based company named Harris associates is said to be influencing the market. This company has pushed Saatchi and Saatchi, an advertizing agency to lead a campaign. The campaign has drove out the founders of the agency Maurice and Charles Saatchi from their place. Harris Associates is aiming to do the same with AMP. They are responsible for putting pressure on the board of directors to fire the chief executive, Mr. Meller. This is all an assumption. Harris Associates is refusing to face any interviews and hence the information cannot be confirmed from them. Harris Associates is interested to invest in 5.3 percent of the company and become the biggest shareholder of the company. They want the chief executive to be expelled. This is their condition for investing in the company.
There are various factors that affect the profitability of a firm (Stiglitz and Rosengard 2015). These factors are discussed below:
- Degree of competition faced by a firm: If the firm has other competitive firms, then the firm has to keep the prices of the services provided by them in a price competitive to the other firms and improve their service. This will attract more customers (investors in this case) to invest in the firm and thus, increase the profitability. If the firm experiences a monopoly and no competition, then the price of the services can be increased in order to increase profitability. Since it will be the only company providing these services, the increase in the price of the services will not decrease the clients in numbers. This being the only company providing the services, the investors will have to come and invest in the very same company management despite of the increased prices. Thus, the firm will face profitability.
In this case, AMP is not the only financial company in Australia. Thus, they will have to work on improving the services provided by them.
- The strength of the demand: An investment firm is always on high demand. Whenever people have some extra income, they are inclined to invest it in something and earn good amount from the investment. Thus, the strength of the demand in this case depends on the income of the investors.
- The state of Economy: When there will be an economic growth of the country, there will be more money in the hands of the investors. Thus, the demand of investing will increase. The investment firm is supposed to face profitability. In this case, when there will be an economic growth of the country, the share prices of the company is also supposed to increase. Thus, investment at that point will result in the profitability of the firm. But in case of a good economy, the share prices will rise only if there are no disputes within the company. Thus, this has to be kept in mind and the disputes within the company employees and the board of directors has to be kept at a minimum.
- Advertising: This is the most important factor in terms of profitability. The profitability of the firm highly depends on the type of advertisements the firm is producing. The people who are interested to invest in any types of schemes provided by the firm, needs to have information of all the types of schemes provided by the firm. Advertisement is the factor that will keep the investors informed about this. Again, when an investor is ready to invest in some schemes, he or she should be explained properly everything about the scheme. This will help the investors to make proper decision while investing. If the firm is successful in doing this, them the demand of the firm will increase. More investors will be recommended by the existing clients to invest in this firm and hence the profitability will increase.
Immediately some steps have to be taken in order to stop this dispute. Otherwise, the company will be suffering more loss and the share prices will run at a minimum. The company should figure out a way to compete with its fellow organizations. Failure to do so will result in closing of this 183 year old company. The reasons that can increase the profitability of the firm have been discussed in the above sections. These factors have to be kept in mind and worked on those. This is supposed to increase the profitability of the company and thus, the company can save its existence. Failure to o so will result in the recent downfall of the company.
ABC News. (2017). AMP leadership strain amid 'car crash occurring in slow motion'. [online] Available at: https://www.abc.net.au/news/2016-11-17/amp-leadership-in-doubt-amid-car-crash-occurring-in-slow-motion/8035568 [Accessed 29 Sep. 2017].
Hill-Wilson, M. and Blunt, C., 2013. Delivering effective social customer service: How to redefine the way you manage customer experience and your corporate reputation. John Wiley & Sons.
Stiglitz, J.E. and Rosengard, J.K., 2015. Economics of the Public Sector: Fourth International Student Edition. WW Norton & Company.
Valmohammadi, C. and Beladpas, M., 2014. Customer relationship management and service quality, a survey within the banking sector. Industrial and commercial training, 46(2), pp.77-83.
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