Strategic Analysis of AMP Limited

Introduction

AMP Limited is an Australian and New Zealand wealth management corporation with a globalized investments and expansive retail banking business in Australia. AMP Company was founded in 1849 to grant financial security to keep on instilling lives dignified lives (Ackermann, & Eden, 2011). The company is an unlisted public company limited by virtue of its shares, domiciled and incorporated in Australia. The company is based in Parramatta and owns Australian Financial Services license. This company provides customers with diverse services at home including retirement income, superannuation, financial and investment advice. In addition, the company manages investments cutting across all fundamental asset categories such as fixed interest, equities, property, infrastructure, and multi-manager funds. The firm concentrates on expanding the market and customer base, and provides diversified services in its pursuit to stretch its revenue base. In the volatile and dynamic business environment, the elements of globalization, competition and technology are revolutionizing the business world. In view of these revolutions, it is conspicuously clear that only those business corporations well adapted to the changes in the market and customers preferences are likely to remain active. There is a need for continuous strategic planning and management to ensure the business is viably responding to market, technological and related needs to keep the business up even amidst the turbulent forces of competition. This work is a report intending to provide a comprehensive strategic analysis of the AMP Company. The report seeks to establish the existing strategic plans with their strengths and limitations, using tools such as VRIN/VRIO model, value chain and core competencies. In addition, the report will tackle AMP’s current strategic approach through reviewing its business-level strategy, international-level strategy, corporate level strategy and cooperative strategy. Furthermore, the report will articulate and develop new strategic options and further grant viable recommendations for its preferred strategic option.

Analysis

AMP Company VRIN/VIRO Framework-

In the realm of strategic management and long-term strategic planning, the VRIO and VRIN analyses, in conjunction with value chain analysis of AMP Corporation offer a concrete experiences and insights concerning resources and capabilities function as key capacities creating the basis of the company’s competitive advantages (David, & David, 2013). This resource-based perspective of the firm inspires strategic objectives and permits a competitive advantage test for comparative analysis of the firm and its market competitors in finance industry.

AMP Corporation’s none core competencies include capabilities and resources influencing competitiveness but yet do not assert the company’s competitive strength. This report cognizes that theses competencies do not satisfy fulfil the requirements within the jurisdiction of VRIN/VRIO model concerning financial services and business operations. However, non-core competencies impact AMP’s value chain, but not the bank’s competitiveness with other firms within the financial domain. For instance, AMP’s online banking IT offer only competitive equality based on a view other banks constitute similar innovations. This VRIN/VRIO analysis equally establishes the company’s resource base for diversification into forms which can potentially complement present processes in investment banking, retail banking and wealth management. Resource and capability fall under the spotlight of non-core competency since AMP Company carries on focusing on financial services. Based on the VRIO/VRIN conceptualization, non-core competency constitutes mild contribution to the competitiveness of the firm in the market.

VRIO Analysis of AMP Limited’s Core Competencies

The core competencies rely on human resources and organizational design and implementation plans. For instance, AMP Limited’s brand is a resource which operates as a core competency meeting all the VRIO criteria of analysis. The company’s brand offers sustainable competitive advantage to the company through illuminating the company’s services in the market for potential customers’ attraction. Skilled industry personnel are yet another core competency adding to AMP’s competitive advantage particular to small firms’ value chains (López-Nicolás, & Meroño-Cerdán, 2011). Additionally, amp Corporation’s big multinational enterprise is deemed a core competency. Its big size grants the company a competitive advantage by making use of cost-leadership or market penetration growth strategies. Observantly, these core competencies fulfil VRIO conceptualization concerning financial services (Valuable, rare, inimitable, and organized).These capabilities foster AMP Company’s strategy for competitive advantage, intensive strategies for growth and business plan.

VRIN Analysis of AMP Company’s Core Resources and Capabilities

In table 1, AMP Company’s core competencies are equally fulfilling the VRIO model. There are three major competencies meeting the long-term competitive strengths for AMP Company. The company’s brand satisfies non-substitutability element of VRIN model based on the view there is no close substitute for the company’s brand. In the same way, qualified personnel in financial services give the company another long-term advantage. From a resource based conception, pooling of such personnel offer competitive power against small-sized firms which lack similar expertise. Moreover, VRIN analysis conceives the company’s large size has abilities to counter aggressive competition based on risk capacity of big business enterprises (Johnson, 2016).

AMP Company’s SWOT Analysis

AMP Company is one of the leading firms in the Australian wealth management market. The company has experienced a lot of international activities concerning acquisitions, dis-investments, investments and mergers-demergers globally. In addition, the company comprises of a rich portfolio of products helping to lower down its revenue volatility. However, recent restructuring of costs led to a short-lived hit on its financial base. Whereas VRIO analysis investigates the company’s internal business environment, the SWOT analysis unveils the company elements of strengths, weaknesses, opportunities for growth, and threats looming by. The SWOT analysis therefore seeks to conceptualize the company externally (Jenkins, 2008). The following represents AMP Company’s SWOT analysis in a condensed and tabulated form;

Beside SWOT analysis, PESTLE model equally offer useful insights about the external conditions the company thrives in. This report decides to venture unto the intricacies of AMP’s PESTLE analysis to compliment external aspects which are not captured in the SWOT conceptualization

AMP Company’s Current Strategic Approach

Strategic management process refers to a method by which companies conceive and actualize a strategy intending to confer a sustainable competitive advantage (Rothaermel, 2013). The success of AMP Company in the global market landscape is inscribed in their sound strategic approaches which pay special attention to organization culture, leadership orientation and the company’s experience in inducing robust strategies and approaches. The extraction of a good strategy begins with strategic planning process which comprises of five salient phases namely; initial assessment, situation analysis, strategy formulation, strategy implementation and strategy monitoring.

Integrated Cost Leadership Strategy

Besides artificial intelligence technology, AMP Company is harnessing its strengths, opportunities, differentiated product portfolio, cost leadership and focused cost leadership to attain a huge competitive advantage against market entrants and already established financial firms. Integrated cost leadership strategy refers to the business strategy whereby differentiated products are sold cheaply. Differentiated products are characterized by unique traits valuable to customers and cost leadership implies that the product or service is provided at a cheaper cost (Bharadwaj et al., 2013). This strategy has enables AMP Company attain a broad customer base particularly in a global perspective. The following refers to a diagrammatic representation of integrated cost leadership and associated implications;

Corporate Level Strategy

Moreover, AMP Company practices a corporate-level strategy which transpires when the business makes a decision impacting the entire company. A corporate-level strategy influences AMP’s finances, management, products and services sold and human resources. This strategic approach optimizes profitability and establishes its financial sustainability in the future. Besides, corporate-level strategy helps elevate competitive advantage over its competitors and maintain offering differentiated services and products to customers.

International Level Strategy

AMP Company has directly invested on expanding overseas markets while maintaining driving cost efficiency. The company has core strategic elements concerning international expansion such as continuing the rapid growth in China businesses, managing Australian wealth protection, New Zealand and ensures capital effectiveness and value. AMP Limited is also focusing on costs to drive operational leverage, and grow wealth management by expanding its revenue base through the increase contributions from advice while investing in product development and platform. The growing international banking market and Australian superannuation system are effectively tapped by the company to increase its expansion globally. Besides, the company is also diversifying revenue growth internationally through investment management especially in real estate and infrastructure by extending wealth operating system to offshore player. This has been enhanced through partnerships with Japan and China to strengthen platforms for future growth (Noe et al., 2017).

Cooperative Strategies

Cooperative strategies constitute approaches applied when two or more companies form a strategic union to achieve a competitive advantage (Wheelen et al, 2010). The unions seek to outshine major market competitors and therefore attain more competitive advantage. AMP Limited has tapped cooperative strategies to penetrate new markets especially in New Zealand, China and Japan. In addition, there are three cooperate strategies in place namely diversifying alliances, franchises and synergistic strategies. These strategies are geared to increase profits through mutual partnerships to counter major competitors in banking industry.

New Strategic Options

AMP Company is on the top notch ensuring it provides enhanced customer experiences and harnessing artificial intelligence to offer mass personalization to advisers and customers (Zott, & Amit, (2018). This shift towards artificial intelligence triggers customers to pay more provided the experiences are great. In the same vein, AMP is harnessing a more human-centric approach with new generation technologies such as Artificial Intelligence and data to actualize a deep human touch to its goods and services; and consequently accompany customers on sustainable financial and personal goals (Meskendahl, 2018). AMP is particularly employing artificial intelligence to offer advisers a comprehensive overview of the customer, provide a guiding framework and automate managerial tasks to advisers for them to have more time in focusing strengthening relationship within and without the company boundaries. The company is venturing into this in response to the recent Sales force platform adoption. In addition, the company is adopting a single platform framework paving a way for the company to become a strong Omni-channel organization. The incorporation of systems implies customer interactions are below one umbrella, providing consumers a choice concerning how they converse. The major rationale is to provide effortless experience for customers. Observantly, AMP is utilizing salesforce platform to sales, services, communities, business analytics and advisers. In addition, the company is embracing its 360 real-time customer goal platform that examines the financial strengths of customers, and uses actual-time probability modeling against 1000 distinct contexts possibly affecting customers’ financial objectives. This is demonstrated to the customer through interactive innovation reinforced by human coaching. In addition, this technology is highly efficient in providing compliant advice which is going to provide the best likelihood of customers achieving their financial goals. The strength of artificial intelligence is finding a better share in AMP Company. The Power of Einstein has been integrated to the Salesforce to maximize customers’ experiences. Einstein refers to a layer delivering predictions and suggestions concerning the company’s distinct business practices and customer data. AMP Company is depending on technology to collect relevant insights for automating responses and actions, consequently making employees productive and the same time elevating customers’ experiences.

Conclusion

In conclusion, strategic is the cyclical and continuous formulation, planning, monitoring, analysis and assessment of all aspects necessary to propel business ventures into higher heights of productivity and profits. Effective strategic management is a good respecter of time in the sense that the versatile business world is dynamic within short cycles. The changes therein alongside the spinning wheel of time have required constant scrutiny of a firm’s strategic approaches to ascertain they are responsive to market needs. Conceived in the year 1849, AMP Company’s vision is to be Australia’s and New Zealand’s best financial service provide by the year 2020. The company was founded on the threshold of a meticulous promise; to offer financial security for people to live with dignity. The company is striving to uphold this process through the development of strategic approaches as articulated above. The company is suppressed with challenges while in its quest to deliver its mandate. Such setbacks include charging fees on customers for services they did not receive from advisers, which decline societal expectations and company standards. The aspects of risks deriving from slow population growth rates endanger the market of AMP Limited services. To counter these challenges, this report proposes the following recommendations;

Recommendations

Risk audit and internal control; the company should enact a risk management framework defining risk-management logistics throughout AMP Company. This risk management should be pervasive with five major elements namely governance, risk strategy, people and culture (Risk-based remuneration), information management systems, and risk management processes.

Another recommendation is to prioritize customers and restore sense of confidence. The company leadership should focus on customer satisfaction and boost their confidence for lifelong retention.

Adherence to legislative frameworks to avoid fines for incompliance to laws related to environmental conservation and taxation. This creates a positive rapport for positive relationships with the government.

Lastly, there is a need for the company to maintain business momentum in challenging environment. The company should remain focused and revisit its international strategy and find means of opening up new retails, and take advantage of globalization and information technology.

Actionable Recommendations

This report recommends the following actionable recommendations;

Reprioritizing portfolio review, the company should consider reviewing and actualizing its portfolio which was conceived in reaction to structural changes in the insurance sector.

Secondly, this report recommends the need for the company to strengthen risk management, internal controls and leadership. The company should invest good financial amount in managing risks, internal regulations and governance.

The last recommendation is transforming advice based on the conception financial advice plays a key role in the lives of Australians by assisting them plan and attain their financial goals. The company should continually embrace this advice and actualize it.

References

Ackermann, F., & Eden, C. (2011). Strategic management of stakeholders: Theory and practice. Long range planning, 44(3), 179-196.

Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: toward a next generation of insights. MIS quarterly, 471-482.

David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A competitive advantage approach. Pearson.

López-Nicolás, C., & Meroño-Cerdán, Á. L. (2011). Strategic knowledge management, innovation and performance. International journal of information management, 31(6), 502-509.

Meskendahl, S. (2018). The influence of business strategy on project portfolio management and its success—a conceptual framework. International Journal of Project Management, 28(8), 807-817.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.

Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic management and business policy. New Jersey: Prentice Hall.

Zott, C., & Amit, R. (2018). Business model design: an activity system perspective. Long range planning, 43(2-3), 216-226.