Amcor Limited: A Leading Packaging Essay Provider.

About Amcor Limited

Question:

Discuss about the Strategic Management for Formulation, Implementation, and Control.

Amcor limited is a public limited manufacture company. It produces and sells large variety of paper, plastic and metal packaging materials. The products produced are used as paper wrapping, rolling and solid fiber containers, hard plastic containers, plastic bags and tubes, and canes for processed food packaging. Amcor is also indulging in pulp, paper and other forest products for tissue and personal care markets. It also trades and distributes paper and pack-aging products. The company is operating in about 43 countries with more than 31000 employees (Amcor, 2016). It has expanded its product line to beverage, food, household, hospital packaging, medical devices, personal and homecare, pharmaceuticals, tobacco and several other products.

Amcor is regularly expanding with the focus of leadership in the fields of packaging. It provides all types of packaging solutions to several parts of the world. It has adopted expansion strategy with mergers, acquisitions and divestments (Business standard, 2015). It acquired several companies in the last decade and expanded its business in many new packaging lines. It provides packaging solutions to wide range of products such as soft drinks, water, juices, sports drinks, wine beer, pharmaceuticals and plastic caps for beverage applications. Over a period of time it has excellence in the field of packaging. The employees are motivated to minimize waste and are trained for waste Management; the focus is on regular product innovation (Eagle, 2017). The team of researchers is implied to put their extensive knowledge to develop innovative and sustainable packaging solutions. There are several customer meets to take review to identify and develop lower impact solutions through material reduction and post recycling.

• The objective is to continue to grow earning and maintain a high level of returns over long term.
• To provide packing solution not only for the business but to ensure product reach to the consumer.
• To minimize wastage and recycle products with use of latest technology for innovative designs.
• To become leader in the field of packaging and paper based products.

Amcor is a leading packaging solution provider with the specified objectives. It is focusing on continuous improvement since it started. Over the period of long time it has adapted and changed its products development and product material to avoid the emission of carbon and the various wastes, which pollutes the environment. It has acquired several companies of different countries to expand its business. This leads to bring extraordinary achievements for the company. It has extended product lines in such a manner that the customer is attracted from the products as it provides different varieties of same product to satisfy all the demands of business (Arbor and Michigan, 2016). Amcor is also focused on divestment of the certain units which they think are becoming burden on the company. It has acquired and divested several companies in past few decades. These strategic decisions helped it to become leader in the field plastic packaging and containers. It supplies large number of plastic bottles to various lines of businesses from health and medicine to shampoo, oil and conditioners and beverages such as soft drinks, juices and beer (CanTech International, 2012). Amcor implemented its objective as a powerful tool to support quality and profitability. It manufactures quality products, which ensures proper hygiene and leakage proof solutions to the clients all over the world. The continuous innovation and development helped Amcor to provide different segments of packaging products which are used by large number of population in their day to day life. Amcor is also organizing events and competitions at various colleges and universities for new ideas and designs. It is nurturing new talent and innovations which may help Amcor in near future to develop some extraordinary products. It has organized such events at China, Thailand, Germany and several other countries (Amcor, 2013).

Amcor Expansion Strategy

The currently aligned strategy has helped Amcor to be a market leader in the field their business. It has evolved with the packaging requirements, paper products and the plastic products which are produced it is the largest producer of Polyethylene terephthalate, which is a thermoplastic polymer resin used in fiber made clothes and containers for food and liquefied products. The acquisition strategy provides further opportunities to expand Amcor’s customer base. It helps to capture high growth markets of different continents and subcontinents to create unique value and preposition (Burke, 2012). In recent years Amcor is moving towards Asian and European markets as there is lots of potential in these markets. The population is very high and the demand of FMCG and health care products is increasing day by day.

Amcor has achieved 10% reduction in green house gas emissions from year 2011 to 2016. Amcor reduced green house gas emission by 28% through energy saving projects, machine temperature optimization, and upgraded equipments in year 2016. Amcor measure the involvement and track progress towards environmental improvement. Sources of indirect emissions include purchased raw materials, energy and outsourced activities, such as transport, recycling or recovery, and waste disposal. For the majority of green house emission the raw materials used for manufacturing processes are the greatest contributors. Amcor also tried to reduce 50% in waste-to-landfill intensity from year 2011 to 2016 and Zero waste to landfills as long term goal (Sustainability Review, 2016). Amcor total waste from operations for year 2016 was 287,334 tones, more than 80% of waste was recycled. Amcor have achieved a 62% reduction in waste-to landfill, significantly better than 50% target. Amcor achieved it through aligned recycling, improved material Management, and improved sorting at production centre (Johnson, 2014). Fifty-four sites sent no waste to landfill. 100 % Amcor sites had water management plans since end of 2016. Amcor water usage intensity decreased by 25%, and total water use decreased 5% compared to base 2011. Most of water is used for cooling processes in the manufacture of rigid plastic packaging.

Acquisitions and mergers are strategic decisions used to expand the business to capture market share, product differentiation, improving supply channels, entering new markets and many more. Amcor is also implementing acquisition strategy in a very effective manner from last 10-15 years. It has continuously acquired different companies sometimes to enter new market, sometimes to capture customer base. Amcor has expanded to various countries such as USA, New Zealand, India, Thailand, China etc. Amcor is acquiring different companies and expanding day by day, but the revenues and profits are comparatively low due to several acquisitions with in years. There are several reasons for the fluctuation in profits. There is lots of financial support is required for acquisition of companies which results to highly affect the financial statements. But when we compare the financial statements for a longer period of time, then it is observed that the profits are increased year by year. Likewise the price of shares is also showing an increasing trend, it is almost doubled in year 2014 (Binsted, 2014). The return on capital is also increased from 10 to 19 per cent during the financial period of 2014-15 which is a good growth indicator; it is almost double from last year. “Amcor also addressed more than 20 acquisitions including the transformational $2 billion purchase of Alcan's packaging assets in 2009, Ball Plastics in 2010 and Aperio Group in 2012” (Mitchell, 2015). Its acquisition strategy is also supported by the shareholders the share prices are regularly increasing and still the demand of shares is continuous which is taking share prices on new heights. Amcor is also declaring dividend 19.5¢ (Cent) a share same as declared last year. This shows support of the stakeholders towards Amcor. The negative fluctuation in profit is due to the price rise in material and labour cost and due to change in the international market exchange rates. There are certain external factors which influences profits and business.  . Amcor is also collaborating with startups to help them innovating and developing elastic and low price packaging solutions. This will help Amcor to enter into developing markets having high demand of packaging goods and plastics (Arbor and Michigan, 2016).

Innovative Solutions and Customer Focus

Amcor is growing with very fast pace but still they have to focus efficiency in the production of the packaging goods. The expansion over the long period of time is continue with the same pace as there is large demand and scope of packaging business in Asia and Europe especially India and China are the good prospects for Amcor. So the company is focusing towards these areas as new market place for the packaging and distribution network. Amcor is also facilitating small businesses and startups with the innovative products and designs. Its strategy is to support regional and new brands with its innovative products so that they grow at good speed. This will help Amcor to build relationship with small brands, startups and small businesses for long period of time and growth in business. And by the time these brands grow in size than this relationship will positively increase profits at higher rate over long period of time.

Goal-Setting: The purpose of goal-setting is to clarify the vision for any business. It is just to draw a diagram on the paper or we can say that planning for any type of decision and drawing the road map to achieve is termed as goal setting. Amcor is already taken its planning step it has grown over the period of time and become leader in the paper, plastic and packaging industry. But in this context goal setting refers to new acquisition assessment, the budget needed for the acquisition etc (Wheelen and Hunger, 2011).

Analysis: it can be understood as the practical approach to attain the Goal which is settled n the first step. The actual features and the requirements such as capital, plant machinery, and financing are part of analysis. In case of Amcor the analysis may be analysis of the firms they are going to acquire or the business units they wants to dispose off.

Strategy Formulation: after deciding and analyzing the plan then the proper road map is prepared it is a strict process which is followed during the whole process of strategic planning and execution. Amcor is regularly planning for acquiring some new companies, they are continuously focusing on acquisition strategy for expansion and side by side they have to plan for controlling the pollution, wastage of material and the acquired business unit performance. Amcor is successful in following the process as it has controlled the green house gas emission, solid waste, water pollution and increased recycling products. (Alkhafaji, A. F. 2011).

Strategy Implementation: Implementation is the realistic approach of doing the formulated plan. It includes the actual decision making and taking those decisions to the desired targets. In case of Amcor the strategy implementation may be a new product launch, acquiring of a new strategic business unit (Binsted, 2014). It is used to explore new market and to capture more and more customer and market sales.

Evaluation and Control: it can be under stood as a comparison between the actual and the planned road map. In case there is a difference in the road map then control is needed and again whole process starts from analyze, plan, implement and control otherwise, the same process ends with achievement. Amcor can also evaluate the decisions and depending upon the decisions it decides to continue or dispose-off the sick strategic business units (Mitchell, 2015). It is a continuous process takes place during whole strategy implementation process.

Amcor's Efforts to Minimize Waste

Amcor is taking quick decisions in shorter periods of time. They have focused their goals towards minimizing costs. Low cost can be obtained, when the raw material is obtained at low prices. Amcor has worked over a long period of time and find a new solution that is recycling papers and plastic products. This has helped them to reduce cost of production. The other factor is to minimize pollution and wastage. Amcor is regularly working on waste management. It has improved in cutting down the waste to very low extent it has introduced short term goals to decrease pollution and waste management (Government of South Australia, 2017). Currently about 60 % of the Amcor sites are having environmental management system. Environment safety plan was introduced for short term and long term targets to avoid waste to landfill, green house gas emissions, and goals for water management. The acquisition strategy puts lots of financial burden on the company results to decreased profits. So the Amcor should focus either on strategic alliance or they should enter in joint ventures with the new companies at a particular market. The other strategy they can follow is to expand the acquisition time period from short term to a longer one. They should first operate and run the already acquired units and when the acquired unit provides higher profits then they should plan for the next acquisition (Simons, 2013).

Conclusion

From the above report it is observed that Amcor is implementing continuously acquisition and divesting strategy to achieve its desired objectives. It has designed its paper, plastic and resin products according to the changing needs of the businesses. Packaging industry is also having huge competition the businesses need new designed products to attract the customers. So Amcor have to work regularly on product innovation and design (Qureshi, 2016). Amcor also needs to minimize waste and pollution emission. Its various acquired companies are contributing to expansion strategy. The profits are fluctuating but still the share price is regularly increased in the long terms it has just doubled from that in year 2012. But before 2012 they were below the launch price for about 4 years. It is recommended that Amcor should focus on Acquisition but should wait for a period of 3-5 years for every acquisition. As there are lots of resources and capital is required in acquisition and maintain the new units. On the other side it has innovated itself in such a manner so that recycling and least wastage are obtained. It has focused on minimizing green house gas emission. New product designs are introduced with different features such as gripping, airtight and recycled bottles to attract the businesses. It is innovating and developing new products to fulfill the emerging needs of the consumers and it is possible that soon they will introduce packages which are self destroyable. They already introduced products which are very light weight and cheap in comparison to aluminum or metal cans (Hubbard, et, al., 2014).

References

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Amcor (2013) Amcor Announces the Winners of its Innovation Packaging Contest. [Online]. Available at: https://www.amcor.com/about_us/media_centre/news/amcor-announces-the-winners-of-its-innovation-pack (Accessed on 11 May 2017).

Amcor (2016) Annual Report. [Online]. Available at: https://www.amcor.com/CorporateSite/media/Annual-reports/Amcor_Annual_Report_2016.pdf (Accessed: 7 May 2017).

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Wheelen, T. L., and Hunger, J. D. (2011) Concepts in strategic management and business policy. USA:  Pearson Education.