Amcor Packaging – 2018

Yayang Ade Suprana

A. Case Abstract

Amcor is a global leader in developing and producing high-quality, responsible packaging

for a variety of food, beverage, pharmaceutical, medical-device, home and personal-care
and other products. Amcor have 195 sites in the world, 33,000 employes more over 40
countries with USD 9.3 Billion Sales.
Amcor's history dates back to the 1860s when Samuel Ramsden, a young stone mason
from Yorkshire, arrived in Australia with his bride to seek his fortune in a new land. He
established Victoria's first paper mill on the banks of the Yarra River in Melbourne.
For most of its life the company was known as APM - Australian Paper Manufacturers
and its products even then touched the daily lives of all Australians.
In the 1970s and 1980s the company added a range of diverse packaging interests to its
traditional papermaking activities. This was achieved through creating new business
partnerships and making strategic acquisitions in order to expand and diversify the
company’s activities. With the focus gradually changing and as the company moved
towards the future, the company name did not quite fit with the new focus of this young,
energetic Australian company. It was decided that the company name should be changed.
On May 1, 1986 APM became Amcor Limited, a name that has become increasingly well
known throughout the world for its packaging innovation and its global reach.
Today, Amcor deploys its global packaging expertise and knowledge of customer packing
and supply chains to produce packaging that is more functional, appealing, and cost
effective for customers and their consumers, and more sustainable for the environment.
Amcor continues to focus on value - creating acquisitions that expand our presence in
emerging markets, improve the industry structure (primarily in developed markets), and
add new technologies so that we can capture further value.

B. Vision Statement (proposed)

To become best packaging in the world

C. Mission Statement (actual)

“Being Amcor” describes who we are as a company, what is most important, and what
success looks like for our stakeholders.

Winning Aspiration
Our winning aspiration is to be THE leading global packaging company.

We Are Winning When:

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 Our PEOPLE are engaged and developing as part of a high-performing Amcor team
Our CUSTOMERS grow and prosper from Amcor’s quality, service and innovation
Our INVESTORS benefit from Amcor’s consistent growth and superior returns
The ENVIRONMENT is better off because of Amcor’s leadership and products

The Amcor Way

The Amcor Way describes the capabilities deployed consistently across Amcor that
enable our businesses to win.

Talent
Attracting, developing and engaging the best people.
Commercial Excellence
Understanding and fulfilling customer needs with exceptional sales, marketing and
service.
Operational Leadership
Building quality, service and cost advantages through procurement and manufacturing.
Innovation
Developing differentiated products, services and processes across our business.
Cash and Capital Discipline
Generating strong cash flow, and deploying it to maximise value for all stakeholders.

Values
What guides our behaviour

Safety
We take care of ourselves and each other, so everyone returns home safely every day.
Integrity
We always do the right thing, at work and in our communities.
Collaboration
We work with people across Amcor and beyond to find the better way.
Accountability
We focus on what is important and take ownership for flawless execution.
Results and Outperformance
We consistently deliver results and strive to surpass expectations.

D. External Audit

Opportunities
1. Making the impossible possible: A major flexible packaging breakthrough
2. The Big Packaging company in the world
3. Focus to dedicated on Product/Food safety
4. Have many supporting facility for new innovation and design center
5. Continued to investment in the industry packaging
6. Powerful go to market.

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 Threats

1. Process adminstration to long, so respond need more time

2. Price over than competitor (expensive)
3. Approvall for decision under regional
4. Intense rivalry by new firms entering
5. Over spec using standart europe and global regulation so need extra money

CPM – Competitive Profile Matrix

RANK COMPANY CEO EMPLOYESS TOTAL REVENUE

SCORE FUNDING
AMCOR 64/100 35,211 $1.3 B $6.2 B
1 PROAMPAC 70/100 3,400 $1.2 B
2 AEP 54/100 2,600 $1.1 B
3 WINPAK 63/100 221 $900.8 M
4 PRINTPACK 59/100 3,000 $400 M
5 COVERIS 55/100 3,000 $3.6 B
6 SEALED AIR 90/100 15,000 $3.9 B
7 OLIVER-TOLAS 58/100 129 $31.7 M
8 FRIESENS 67/100 974 $131 M
9 BNP 56/100
10 TRANSCONTINENTAL 65/100 8,000 $190 M

External Factor Evaluation (EFE) Matrix

Critical Success Factors Weight Rating Weighted Score

Opportunities
1. Retaining ‘Generation Y’ consumers. 0.10 3 0.30
2. Companies such as Cadbury Schwappes can 0.06 4 0.24
be purchased relatively cheaply.
3. Health-minded public. 0.08 3 0.24
4. Reach teenagers through Pepsi Zone in malls 0.08 2 0.16
and shopping centers.
5. Easier to do business globally now than ever 0.08 3 0.24
before.
6. Powerful go to market. 0.03 1 0.03
7. Different cultures enjoy drinks with less sugar 0.05 3 0.15
than Americans.
Threats
1. One production facility and four distribution 0.04 2 0.08
centers affected in Louisiana from Hurricane
Katrina.
2. Celebrities’ actions and public behavior. 0.06 1 0.06
3. A deteriorating economy. 0.05 2 0.10
4. Intense rivalry by new firms entering. 0.12 2 0.24
5. Coca-Cola has largest share market. 0.15 3 0.45

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6. Losing KFC, Pizza Hut, and Taco Bell 0.06 4 0.24
acquisitions.
7. Anti-American views by the Middle East 0.04 2 0.08
(Mecca and Zam Zam Colas).
Total 1.0 2.61

E. Internal Audit
Strengths

1. Well-known brand.
2. World leader in convenient food and beverages.
3. Available in 200 countries.
4. Powerful go to marketing.
5. Larger corporation than Coke.
6. Through diversification has reduced risk.
7. Diverse line of products meeting different cultural needs.
8. Great marketing plan consistent with celebrities in advertising.
9. Great organization chart.
10. Consistently pays cash dividends.
11. Sales grew on average of 16 percent for past 40 years.
12. Return to shareholders grew 16 percent.
13. Many different companies owned by Pepsi in different countries.

Weaknesses

1. Coke outsells Pepsi in all areas of the world.

2. Pepsi has not been able to achieve 15 cent annual increase in earnings.
3. Too much Goodwill on balance sheet.
4. Decrease in sales in other beverages.
5. Information architecture is weak.
6. Net profit margin is below Coke’s.

Financial Ratio Analysis (January 2006)

Growth Rates % PepsiCo Industry SP-500

Sales (Qtr vs year ago qtr) 12.80 21.10 14.20
Net Income (YTD vs YTD) (8.00) 6.50 16.30
Net Income (Qtr vs year ago qtr) (36.70) 5.50 17.00
Sales (5-Year Annual Avg.) 7.49 7.96 4.93
Net Income (5-Year Annual Avg.) 11.50 15.05 10.40
Dividends (5-Year Annual Avg.) 10.33 9.39 4.27
Price Ratios

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 Current P/E Ratio 25.6 19.9 18.8
P/E Ratio 5-Year High 34.3 45.1 64.8
P/E Ratio 5-Year Low 17.7 17.2 17.4
Price/Sales Ratio 3.13 2.07 1.48
Price/Book Value 6.92 4.88 2.83
Price/Cash Flow Ratio 18.70 13.30 12.40
Profit Margins
Gross Margin 57.8 54.4 47.2
Pre-Tax Margin 19.5 15.3 11.9
Net Profit Margin 12.6 10.9 8.0
5-Yr Gross Margin (5-Year Avg.) 60.3 56.3 47.3
5-Yr Pre-Tax Margin (5-Year Avg.) 17.6 14.0 9.4
5-Yr Net Profit Margin (5-Year Avg.) 12.4 9.9 5.8
Financial Condition
Debt/Equity Ratio 0.16 0.59 1.06
Current Ratio 1.2 1.1 1.4
Quick Ratio 1.0 0.8 0.9
Interest Coverage 29.4 8.4 3.5
Leverage Ratio 2.2 2.7 5.7
Book Value/Share 8.54 8.33 13.26
Investment Returns %
Return on Equity 27.9 25.7 15.3
Return on Assets 12.8 9.5 2.7
Return on Capital 24.0 16.2 7.4
Return on Equity (5-Year Avg.) 31.5 24.2 11.9
Return on Assets (5-Year Avg.) 13.6 8.4 2.0
Return on Capital (5-Year Avg.) 25.7 14.2 5.6
Management Efficiency
Income/Employee 26,000 24,000 29,000
Revenue/Employee 204,000 223,000 367,000
Receivable Turnover 8.8 10.0 7.7
Inventory Turnover 8.1 8.6 7.8
Asset Turnover 1.1 1.0 0.4
Adapted from www.cnbc.com

Date Avg. P/E Price/Sales Price/Book Net Profit Margin (%)

12/04 21.00 2.99 6.46 14.3
12/03 20.80 2.95 6.68 13.2
12/02 23.60 2.90 7.82 13.2
12/01 30.90 3.17 9.90 9.9
12/00 26.90 3.53 9.95 10.7
Adapted from www.cnbc.com

Date Book Value/ Share Debt/Equity ROE (%) ROA (%) Interest Coverage
12/04 $8.08 0.18 31.0 15.0 34.2
12/03 $6.98 0.14 30.0 14.1 31.6
12/02 $5.40 0.24 35.6 14.1 28.3
12/01 $4.92 0.31 30.8 12.3 19.4
12/00 $4.98 0.32 30.1 11.9 15.5
Adapted from www.cnbc.com

Net Worth Analysis (January 2006 in millions)

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1. Stockholders’ Equity + Goodwill = 13,572 + 3,909 $ 17,481
2. Net Income x 5 = $4,212 x 5= $ 21,060
3. Share Price = $60.00/EPS 2.31 = 138.6 x Net Income $4,212 = $ 109,402
4. Number of Shares Outstanding x Share Price = 1,659 x $60.00 = $ 99,540
Method Average $61,871

Internal Factor Evaluation (IFE) Matrix

Critical Success Factors Weight Rating Weighted Score

Strengths
1.Well-known brand 0.15 4 0.60
2. World Leader in convenient food and 0.08 4 0.32
beverages
3. Available in 200 countries 0.10 4 0.40
4. Powerful go to marketing 0.06 4 0.24
5. Larger corporation than Coke 0.03 3 0.09
6. Through diversification has reduced risk 0.03 3 0.09
7. Diverse line of products meeting different 0.06 4 0.24
cultural needs
8. Great marketing plan consistent with 0.03 3 0.09
celebrities in advertising
9. Great organization chart 0.01 3 0.03
10.Consistently pays cash dividends 0.04 3 0.12
11. Sales grew on avg. of 16 percent for past 0.06 4 0.24
40 years
12. Return to Shareholders grew 16 percent 0.06 4 0.24
13. Lot of listing on Web sites of different 0.03 3 0.09
companies owned by Pepsi in different
countries.
Weaknesses
1.Coke out sells Pepsi in all areas of the 0.07 1 0.07
world
2. Pepsi has not been able to achieve 15 cent 0.03 2 0.06
annual increase in earnings
3. Too much Goodwill 0.03 1 0.03
4. Decrease in sales in other beverages 0.05 2 0.10
5. Information architecture is weak 0.02 2 0.04
6. Net profit margin in below the 0.06 1 0.06
competition’s
Total 1.00 3.15

F. SWOT Matrix
Strengths Weaknesses
1. Well-known brand. 1. Coke outsells Pepsi in all
2. World leader in convenient areas of the world.
food and beverages. 2. Pepsi has not been able to
3. Available in 200 countries. achieve 15 cent annual increase
4. Powerful go to marketing in earnings.
5. Larger corporation than Coke. 3. Too much Goodwill.
6. Through diversification has 4. Decrease in sales in other

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 reduced risk. beverages.
7. Diverse line of products- 5. Information architecture is
meeting different cultural weak.
needs. 6. Net profit margin is below
8. Great marketing plan-consistent Coke’s.
with celebrities in advertising.
9. Great organization chart.
10. Consistently pays cash
dividends.
11. Sales grew on avg. of 16
percent for past 40 years.
12. Return to shareholders grew 16
percent.
13. Lot of listings on Web site of
different companies owned by
Pepsi in different
countries.
Opportunities S-O Strategies W-O Strategies
1. ‘Generation Y’ consumers are 1. Continue to use brand name to 1. Expand into international
known for their Pepsi brand attract Generation Y consumers markets (W1, O5).
loyalty. (S1 O1).
2. Companies such as Cadbury 2. Continue to expand product line
Schweppes can be purchased in the US and abroad (S7, O7).
relatively cheaply. 3. Develop new organic drinks (S1,
3. Health-minded public. O3).
4. Reach teenagers through Pepsi
Zone in malls and shopping
centers
5. Easier to do business globally
now than ever before.
6. Powerful go to market
7. Different cultures enjoy drinks
with less sugar than Americans.
Threats S-T Strategies W-T Strategies
1. One production facility and four 1. 1. Produce a cheaper brand of Pepsi
distribution centers affected in (W1, T3, T5).
Louisiana from Hurricane
Katrina.
2. Celebrities’ actions and public
behavior.
3. A deteriorating economy.
4. Intense rivalry by new firms
entering.
5. Coca-Cola has largest share
market.
6. Losing KFC, Pizza Hut, and
Taco Bell acquisitions.
7. Anti-American views by the
Middle East (Mecca and Zam
Zam Colas).

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G. SPACE Matrix

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y-axis = FS + ES = 5.4 + (-3.6) = 1.8
x-axis = CA + IS = -2.0 + (+4.6) = 2.6

H. Grand Strategy Matrix

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 1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification

I. The Internal-External (IE) Matrix

The IFE Total Weighted Score

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 Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
High I II III
3.0 to 3.99
PepsiCo Beverages

Medium IV V VI
The EFE Total 2.0 to 2.99 PepsiCo
Weighted Score Pepsi Co International
Frito-Lay

Low VII VIII IX

1.0 to 1.99
Quaker Foods

Grow and Build

Segments Revenue Profits (operating)

PepsiCo International $9,862M $1,323M
Frito-Lay $9,560M $2,389M
PepsiCo Beverages $8,313M $1,911M
Quaker Foods $1,526M $475M

J. QSPM
Strategic Alternatives
Further Expand Produce a Cheaper

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 into International Brand of Pepsi
Key Internal Factors Weight Markets Products
Strengths AS TAS AS TAS
1. Well-known brand 0.15 4.00 0.60 3.00 0.45
2. World leader in convenient food and beverages 0.08 4.00 0.24 1.00 0.08
3. Available in 200 countries 0.10 4.00 0.40 1.00 0.10
4. Powerful go to marketing 0.06 --- --- --- ---
5. Larger corporation than Coke 0.03 --- --- --- ---
6. Through diversification has reduced risk 0.03 2.00 0.06 4.00 0.12
7. Diverse line of products meeting different cultural 0.06 2.00 0.12 4.00 0.24
needs
8. Great marketing plan consistent with celebrities in 0.03 --- --- --- ---
advertising
9. Great organization chart 0.01 --- --- --- ---
10. Consistently pays cash dividends 0.04 --- --- --- ---
11. Sales grew on avg. of 16 percent for past 40 years 0.06 --- --- --- ---
12. Return to Shareholders grew 16 percent 0.06 --- --- --- ---
13. Lot of listing on Web site of different companies 0.03 --- --- --- ---
owned by Pepsi in different countries
Weaknesses
1. Coke outsells Pepsi in all areas of the world 0.07 4.00 0.28 3.00 0.21
2. Pepsi has not been able to achieve 15 cent on annual 0.03 --- --- --- ---
increase in earnings
3. Too much Goodwill 0.03 --- --- --- ---
4. Decrease in sales in other beverages 0.05 1.00 0.05 4.00 0.20
5. Information architecture is weak 0.02 --- --- --- ---
6. Net profit margin in below the competition’s 0.06 --- --- --- ---
SUBTOTAL 1.75 1.40

Further Expand Produce a Cheaper

into International Brand of Pepsi
Key External Factors Weight Markets Products
Opportunities AS TAS AS TAS
1. Retaining ‘Generation Y’ consumers. 0.10 --- --- --- ---
2. Companies such as Cadbury Schweppes can be 0.06 3.00 0.18 2.00 0.12
purchased relatively cheaply.
3. Health-minded public. 0.08 --- --- --- ---
4. Reach teenagers through Pepsi Zone in malls and 0.08 --- --- --- ---
shopping centers.
5. Easier to do business globally now than ever before. 0.08 4.00 0.24 2.00 0.16
6. Powerful go to market. 0.03 --- --- --- ---
7. Different cultures enjoy drinks with less sugar than 0.05 4.00 0.20 3.00 0.15
Americans.
Threats
1. One production facility and four distribution centers 0.04 --- --- --- ---
affected in Louisiana from Hurricane Katrina
2. Celebrities’ actions and public behavior 0.06 --- --- --- ---
3. A deteriorating economy 0.05 2.00 0.10 4.00 0.20
4. Intense rivalry by new firms entering 0.12 2.00 0.24 4.00 0.48
5. Coca-Cola has largest share market 0.15 3.00 0.45 4.00 0.60
6. Losing KFC, Pizza Hut, and Taco Bell acquisitions 0.06 --- --- --- ---
7. Anti-American views by the Middle East (Mecca and 0.04 3.00 0.12 1.00 0.04
Zam Zam Colas)

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SUBTOTAL 1.53 1.75
TOTAL ATTRACTIVNESS SCORE 3.28 3.15

K. Recommendations

 Expand further into international markets over a 5-year period by building 50 new
bottling and processing companies at a cost of $4 billion. Focus on emerging
markets where Coke is not as entrenched and increase advertising and marketing
promotions in these areas at a cost of $200M.
 Produce a cheaper Pepsi brand of drinks and test market in the US at a cost of
$500M.

L. EPS/EBIT Analysis
$ Amount Needed: $4,700M
Stock Price: $60
Tax Rate: 25%
Interest Rate: 7%
# Shares Outstanding: 1,659M

M. Epilogue

The three biggest sellers of bottled water in the U.S.--Nestlé, PepsiCo, and
Coca-Cola --all introduced sugarless flavored water in 2005. All three companies are

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chasing a relatively small market because in 2004 (the latest available figures), the U.S.
wholesale market for flavored water was only $170 million, versus $47 billion for soda,
$14.4 billion for fruit beverages, and $9.2 billion for plain bottled water. As for growth,
sales of flavored water could go to $800 million by 2009, says Beverage Marketing, a
research firm.
On January 2, 2006, PepsiCo acquired Polish snack maker Star Foods for an
undisclosed sum. One of Poland's leading makers of savory snacks, Star Foods was a
privately held company owned by the Mitzalis family, Advent International, Copernicus
Capital Partners, and Cazolico S.A. The acquisition strengthens PepsiCo’s position as
Poland's market leader in potato chips and gives PepsiCo the largest position in the
broader savory snack category, which includes potato chips, pretzels, and nuts.
PepsiCo has sold Lay's potato chips in Poland since 1991.
In December 2005, Tropicana Products, Inc., a division of PepsiCo, introduced
the first national orange juice with fiber. Tropicana Pure Premium Essentials® with
Fiber delivers 3 grams of added fiber in every 8-oz. glass - as much fiber as is found in
a medium-sized orange. Tropicana Products is the leading producer and marketer of
branded fruit juices.

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