A Strategic Analysis of AMC Entertainment Holdings, Inc.’s Current Financial Operations

A company that experiences financial difficulties and is on the brink of collapse is AMC Entertainment Holdings, Inc. AMC is an entertainment company that operates in the theatrical exhibition industry through its subsidiaries. The organization was founded in 1920, with its headquarters being in Leawood, Kansas (AMC Theatres, n.d.). AMC is the world’s largest theatre operator, which owns, leases, or operates 10,543 screens and 950 theatres located in fourteen countries (AMC Entertainment Holdings, Inc., 2021). The company is unlikely to achieve long-term success if it fails to implement better business and corporate strategies. In essence, AMC, an epitome of a struggling company, should rethink its strategies and financial plan because there is a need for the organization to attain and maintain a core competency in financial management to thrive in today’s dynamic and competitive business arena.

Current Financial Operations and Performance

AMC is a market leader in the theatrical exhibition industry. Today, it is among the largest and most successful theatrical exhibition companies in the world (AMC Entertainment Holdings, Inc., 2021). The organization has two business segments, namely US markets and international markets. The company primarily operates in the United States where it owns, leases, or operates 590 theatres and 7,668 screens (AMC Entertainment Holdings, Inc., 2021). As of December 31, 2020, the company had 25,019 employees in fourteen countries (AMC Entertainment Holdings, Inc., 2021). The organization generates revenue through ticket sales, advertising in its theatres and screens, and food, drink, and merchandise sales. The main sources of the firm’s revenue are box office admissions (AMC Entertainment Holdings, Inc., 2021). The company’s strengths include a strong brand image and product innovation capabilities. AMC should use its strengths to not only address its threats and weaknesses but also exploit new business opportunities, such as increased demand for video streaming services.

AMC is on the brink of bankruptcy. The analysis of the company’s recent financial statements indicates that the company is struggling to remain operational. In 2020, the company made a net loss of $4.589 billion, which was a huge increase from a net loss of $149 million in 2019 (AMC Entertainment Holdings, Inc., 2021). AMC’s financial performance has been on the decline in the last few years. Despite concerted efforts by the company, it is still struggling to survive and break even (Whitten, 2021). The company is currently implementing a post-COVID recovery strategy to recoup its losses (AMC Entertainment Holdings, Inc., 2021). COVID-19 has pushed AMC to the brink of bankruptcy (Brooks, 2021). A $917 million infusion from its investors in January this year helped the company escape bankruptcy (Brooks, 2021). Other factors that have led to AMC’s financial difficulties include increased competition, high demand for online-based entertainment, high operating costs, and the implementation of ineffective strategies. In the current times, no organization is immune to failure. Therefore, improving the company’s financial position and performance should be a priority for AMC’s management.

The company’s current financial plan involves investing in customer engagement initiatives to attract and retain clients to increase revenue, closing underperforming theatres, opening theatres in strategic places, acquiring other companies with valuable capabilities and competencies, and pursuing equity issuances. Moreover, the company is negotiating with its landlords and creditors to reduce rent obligations and improve its liquidity (AMC Entertainment Holdings, Inc., 2021). Other components of AMC’s financial plan are the deployment of strategic pricing structures to enhance revenue, engaging in cost-effective marketing, and utilizing new technologies to improve its culture of innovation (AMC Entertainment Holdings, Inc., 2021). The company should rethink its business and corporate strategies, which seem to be ineffective. Going forward, AMC should seek to implement a practical financial plan to survive in the current pandemic times.

Strategies AMC Can Implement to Achieve a Sustainable Competitive Advantage

AMC can take the following six actions to achieve a sustainable competitive advantage. The first strategy is hiring and retaining the right people. Today, employees can be a sustainable source of competitive advantage (Mathur, 2015). With this in mind, AMC should rethink its HR policies and implement programs aimed at ensuring that it attracts, recruits, and retains highly skilled individuals. Second, AMC should differentiate its products and services from those offered by competitors because effective product attribute differentiation can enhance its competitiveness and financial performance. Third, the company should acquire or work with other companies operating in the industry. Strategic alliances or acquisitions can result in improved financial performance. Fourth, the company should implement an employee training and development program aimed at helping its workers acquire customer service skills and competencies. In this light, the organization can achieve a sustainable competitive advantage through proper customer engagement. Finally, the company should seek to create and maintain a culture of innovation because being innovative is one of the keys to achieving long-term organizational success (Lee & Yoo, 2019). In essence, to thrive in a highly competitive entertainment industry, AMC should take reasonable steps to achieve a competitive advantage over its rivals.

A Plan to Implement the Strategies

AMC should implement the proposed strategies knowledgeably and systematically. Some of the strategies will result in changes, which internal stakeholders, such as employees and managers, can resist. Since resistance to change can affect the implementation of the chosen strategies, AMC should communicate the importance of these strategies and explain their role in helping the organization achieve its goals and objectives. AMC’s senior management should be responsible for implementing the strategies. Senior managers should work closely with the finance department to ensure the implementation of the strategies being done in a cost-efficient and cost-effective manner. It would be reasonable to implement the discussed strategies in the next twelve months. Senior managers should set clear goals and define key variables. In their turn, operations manager should delegate roles and determine responsibilities. The HR manager will be responsible for improving HR policies and implementing practical employee training and development programs. The marketing manager will be responsible for developing marketing campaigns promoting the organization’s products and services as unique and affordable. The company’s leaders and managers will have the task of building a culture of innovation in the workplace.

Conclusion

AMC is on the brink of bankruptcy. The company has financial difficulties due to several factors, including the COVID-19 pandemic, ineffective management, increased competition, and changes in customers’ tastes and preferences. In this regard, AMC should implement practical strategies to improve its financial position and achieve a sustainable competitive advantage. AMC’s current financial plan, being the post-COVID recovery plan, involves implementing several strategies to improve its ability to generate cash from operations. AMC should endeavor to achieve and maintain a sustainable competitive advantage. Some of the actions that the organization can take to improve its competitive position are hiring and retaining the right people, utilizing new technologies, partnering with other companies in the industry, and establishing a culture of innovation.