In the past three years we have warned our financial institutions to revise their expectations for the following year and focus on productivity improvements. We are sending the same message for 2012! Most have their business plans set for next year by now but a re-look is required as the shadow of Europe is casting gloom on global economics for the next year. All countries are inter-linked and can not completely avoid the fallout!
Europe has major recovery/debt issues that must be resolved. Greece is a small example of the problems as this week their borrowing cost went over the 7% level. With larger debts in Italy, Spain and yes. even France that cost level will create major economic erosions. Politicians' reluctance to deal with the realities in a timely fashion only adds to the woes and leads to the end of political careers.
2012 is going to be a year where cost management improvements and market share acquisitions will be needed for even minimal growth. The large institutions have more scope and options to massage whereas smaller credit unions will have a tougher time if they have previously kept their costs in check. For everyone there will be some uncontrollable increases by utilities and dominant suppliers but you still need to assess the possibilities, the billings and the alternatives. Discretionary items will be on the chopping block for sure but be careful that you don't do surgery on your customer/loyalty strengths.
Set-up a team of objective resources to re-evaluate your productivity mix and the opportunities that can start immediately but no more than 90 days from now. 2012 impacts are needed and flexibility must be sustained throughout the year. Keep expectations in check!
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