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Cost Reduction

In: Business and Management

Submitted By louis0206
Words 4954
Pages 20
Intelligent Cost Reduction
Developing & executing a program to reduce cost & create a sustainable operating platform
July 2008



1 2 3 4 5 6 Point of view Anatomy of a successful total cost management program Beginning with the business & front office Opportunities in the support units Some lessons learned PwC qualifications to help

3 7 11 16 19 21

Point of view

Point of view
• Cost management is a key issue today and for the foreseeable future – The market is experiencing a severe liquidity crunch and the explosion of a global asset bubble well beyond sub-prime. At the root of this crisis is not only asset values, but the amount of capital in the financial system today versus the size and liquidity of the balance sheets (and off-balance sheet commitments) of financial institutions. This situation is not likely to reverse itself for a number of years. In the environment of de-leveraging and scarcity of capital, we believe fundamental re-thinking regarding business strategies, operating models and cost structures will be necessary. • A pre-securitization baseline may be the appropriate mindset – If one assumes that the securitization markets have significantly contracted in a permanent fashion, then the appropriate way to think about the business may be in a pre-securitization baseline, adjusted for key acquisitions/divestitures, etc. This means that the proper mindset to consider in the business strategy and budgeting area may be a pre-2004 or 2005 operating model and cost structure. • An understanding true profitability of each business is essential – Many institutions are in the midst of re-thinking their fundamental business strategies. Many have expanded into proprietary trading activities, made acquisitions and/or started new businesses (or kept old businesses) due to the overall attractiveness of the markets and…...

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