Purpose/ Aims

The objective of the paper is to conduct performance and position analysis of AMP Company. Performance analysis of a company serves as a process in recognising the company’s financial strengths along with weaknesses of the company through properly maintaining the relationship among the balance sheet items along with profit and loss account. The purpose of the paper is to conduct short-term and long-term forecasting long with forecasting and the organizational goal can be observed with evaluation of financial performance (Zalengera et al., 2014). The purpose of the company is to conduct financial as well as business analysis of AMP Company and evaluate the financial changes over five years period. Business performance of the company will be will be evaluated through conducting PESTEL analysis and competitive situation of the company.

From evaluation of the business of AMP Company it has been observed that the industry crunch has resulted in loss of the AMP. The company also have a large number of consumers those tend to be failing drastically. Certain problems have been recognised in the business as well as financial performance of the company (Uechi et al., 2015). This has necessitated superior wealth management along with renowned insurance AMP Company has modified the business lines for superannuation and certain other departments following its current set of poor financial results.                   

AMP Limited is positioned as a renowned wealth management company. The operating systems of the company includes Australian wealth management that offers financial advice services, unit-based superannuation, administration of performance that encompass group and individual group, insurance products along with disability and income protection (Petruzzo et al., 2015). AMP Bank is deemed to offer housing mortgages, transaction banking along with self-managed superannuation fund offerings, financial services of New Zealand that offers risk insurance, mature book, and wealth management along with Australian mature business. Such businesses includes whole of life, investment-based, endowment, investment-based investment account, retirement savings account, annuities, eligible rollover fund, insurance bonds, individual superannuation along with guaranteed savings account (Azzopardi & Nash, 2013).

PESTEL Analysis serves as a tool or framework that is employed in case of the marketers in order to evaluate and monitor AMP Limited Company’s macro-environmental factors that have an effect on the business of the company. Such evaluation will help in analysing the business performance of the company along with the environment in which it is operating (Rabl et al., 2014).

• Political-Government policies is deemed to impact the financial services industry. In some cases political advantage of a specific party, the government indicates certain measures as per their advantages associated with wavier of short-term agricultural loans for attracting attention of farmers. FDI considers increasing certain limits from 49% to 26%. The Union-budget presented has facilitated the farmers certain rebate on the loan if they repay 75% of such overdue within specific time (Grant, 2016).
• Economic- Cash reserve ratio is observed to be decreased by 0.25% to 4.5% of the net time and demand liabilities to possibly induce major liquidity of a few billion, token reduction in expected lending rates along with comfortable liquidity position and current products considered by these financial institutions. Benchmark repo rate is observed to be 8%, reverse repo along with marginal standing facility stand that remain unchanged 7% to 9% considerably. Bank rate is also observed to be maintained at 9%. Following the 1% decrease in the recent year, statutory liquidity ratio is deemed to remain unchanged at 23% of NDTL (Rosemann & vom Brocke, 2015). The major focus of the financial policy maintains inflation control and anchoring along with inflation anticipations other than enhancing risks for economic growth. The government policies indicated that inflationary risks and pressures associated with fiscal deficit and current account deficit constrain it from offering an efficient fiscal policy response for enhancing economic growth.
• Social- AMP Company has decided to develop strategies in order to enter the education sector. The company is considering partnering with municipal authorities of the city for making people aware of the environmental threats posed by the plastic bags within the surrounding. The financial services company already offers loans for small businesses in which it owns 62.3% stake (Wilson, Harper & Darling, 2013). The company considers enhancing the distribution network along with consumer base of the AMP Companyfor expanding and also decreasing the cost of funds. The company intended to gain an entry within the education industry might be advantageous within the long run.
• Technological- Profitability ratio of AMP Company has gradually increased over the past three years. Number of employees within the group increased in the year 2011 in comparison to 2010. Administration cost per asset ratio decrease in the year 2011 in comparison to 2010 and similarly cost to income ratio enhanced by gradual percentage. Enhancing productivity might likely improve the profit margin of the company (Real, Roldán & Leal, 2014). ATM serves as the latest developments in consideration to computer technology along with telecommunications that encouraged the financial institutions to alter concept of offering financial services in any region. The financial institutions these days are utilising SMS and internet as a vital tool for promotions that can offer increased utility to all its consumers. Within the buzzword in the recent years and all the financial institutions is attempting to adopt it within centralised financial institution through which it can control its overall business operation.
• Legal – Certain government policies considers stimulating growth materialization, fiscal policy in order to reinforce certain positive impact of certain actions along with retaining a focus on dealing with inflation (Alexander et al., 2014). Guidance offered that liquidity management from the Australian government can make sure suitable credit flows within certain productive actors in the economy along with suitable responses to shocks confirmed by external developments.
• Environmental- AMP Company is being highly aware of the environment along with being associated with certain environmentally concerned associations. The company imposed by the plastic bags to the surrounding along with the recycle bags instead (Blackburn, Hart & Wainwright, 2013). The company distributed recycled and eco-friendly bags and consumers along with retailers across several insurance markets within the city.

Limitations

Gross profit margin of AMP Company is observed to decrease from the year 2014 to 2016. Decreased ratio indicates that that the organization is selling its inventory at an increased profit percentage. The company is recommended to purchase inventory at a cheap price and also try to purchase their inventory at by gaining purchase discount from manufacturers. Net profit margin is also observed to be declined from 5.84% in 2014 to -2.33% in 2016. This indicates that the company is not able to manage its expenses and is not able to revenues constant (Spronk, Steuer & Zopounidis, 2016). The company is recommended to reduce spending budgets in order to enhance the profit ratio. Return on equity is observed to decrease from 10.80% in 2014 to -4.61% in 2016. This indicates that the company is not able to employ its stakeholder’s money to attain profits. It is recommended that the company must use investor’s funds in a better manner (AMP Ltd. – AnnualReports.com., 2017).

Total current ratio of AMP Company is observed to decline from 1.34 in the year 2014 to 0.68 in the year 2016. This indicates that the company is not that capable to make its debt payments in a prompt manner. It is recommended that AMP Company must make enough profit from its operations too support its activities. Moreover, quick ratio of the company is gathered to decline from 1.34 in 2014 to 0.68 in 2016. This indicates that the company is not that capable to address its current liabilities without selling its long term assets. It is recommended that more assets will be easily converted within cash if needed (Rosenbusch, Rauch & Bausch, 2013).

Cash operating cycle of AMP Company is gathered to increase from 497 in 2014 to 2589 in 2016. These indicators that the company is taking more time to receive cash from its consumers from its initial inventory cash outlay. It is recommended that the company must make greater attempts in quickly and effectively buy, sell and collect from selling its inventory (Barrett & Weinstein, 2015).

Debt ratio of AMP Company is observed to increase from 0.94 in 2014 to 0.95 in 2016. This indicates that the company’s business is not that stable as it is not capable to pay off its debt quickly. It is recommended that the company should focus more on equity financing in order to enhance their operations (Löfsten, 2014).

Explanation of the Business

Conclusion

The objective of the paper was to conduct performance and position analysis of AMP Company. It was gathered from the analysis that the business of AMP Company it has been observed that the industry crunch has resulted in loss of the AMP. The company also have a large number of consumers those tend to be failing drastically. AMP Company has decided to develop strategies in order to enter the education sector. The company is considering partnering with municipal authorities of the city for making people aware of the environmental threats posed by the plastic bags within the surrounding. Based on the ratio analysis AMP Company is recommended that the company should focus more on equity financing in order to enhance their operations.

References

Alexander III, W. P., Dimpsey, R. T., Levine, F. E., & Urquhart, R. J. (2014). U.S. Patent No. 8,843,898. Washington, DC: U.S. Patent and Trademark Office.

AMP Ltd. – AnnualReports.com. (2017). Annualreports.com. Retrieved 23 April 2017, from https://www.annualreports.com/Company/amp-ltd

Azzopardi, E., & Nash, R. (2013). A critical evaluation of importance–performance analysis. Tourism Management, 35, 222-233.

Barrett, H., & Weinstein, A. (2015). Corporate entrepreneurship, the marketing mix, and business performance. In Proceedings of the 1997 Academy of Marketing Science (AMS) Annual Conference (pp. 144-150). Springer International Publishing.

Blackburn, R. A., Hart, M., & Wainwright, T. (2013). Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), 8-27.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Löfsten, H. (2014). Product innovation processes and the trade-off between product innovation performance and business performance. European Journal of Innovation Management, 17(1), 61-84.

Petruzzo, P., Gazarian, A., Kanitakis, J., Parmentier, H., Guigal, V., Guillot, M., … & Badet, L. (2015). Outcomes after bilateral hand allotransplantation: a risk/benefit ratio analysis. Annals of surgery, 261(1), 213-220.

Rabl, T., Jayasinghe, M., Gerhart, B., & Kühlmann, T. M. (2014). A meta-analysis of country differences in the high-performance work system–business performance relationship: The roles of national culture and managerial discretion. Journal of Applied Psychology, 99(6), 1011.

Real, J. C., Roldán, J. L., & Leal, A. (2014). From entrepreneurial orientation and learning orientation to business performance: analysing the mediating role of organizational learning and the moderating effects of organizational size. British Journal of Management, 25(2), 186-208.

Rosemann, M., & vom Brocke, J. (2015). The six core elements of business process management. In Handbook on business process management 1 (pp. 105-122). Springer Berlin Heidelberg.

Rosenbusch, N., Rauch, A., & Bausch, A. (2013). The mediating role of entrepreneurial orientation in the task environment–performance relationship: A meta-analysis. Journal of Management, 39(3), 633-659.

Spronk, J., Steuer, R. E., & Zopounidis, C. (2016). Multicriteria decision aid/analysis in finance. In Multiple Criteria Decision Analysis (pp. 1011-1065). Springer New York.

Uechi, L., Akutsu, T., Stanley, H. E., Marcus, A. J., & Kenett, D. Y. (2015). Sector dominance ratio analysis of financial markets. Physica A: Statistical Mechanics and its Applications, 421, 488-509.

Wilson, P., Harper, N., & Darling, R. (2013). Explaining variation in farm and farm business performance in respect to farmer behavioural segmentation analysis: implications for land use policies. Land Use Policy, 30(1), 147-156.

Zalengera, C., Blanchard, R. E., Eames, P. C., Juma, A. M., Chitawo, M. L., & Gondwe, K. T. (2014). Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, 335-347.