brexit emerging strategic options › fileadmin › user_upload › ... · 2016-11-18 · brexit...
TRANSCRIPT
2016 Monitor Deloitte
Brexit – Emerging Strategic Options Dr. Florian Klein, 3rd November 2016
2016 Monitor Deloitte
1
2
3
What drives our future?
How to reduce complexity?
What is the right course of action?
Brexit – a tremendous challenge
2016 Monitor Deloitte 3
Perceive the drivers of the future
2016 Monitor Deloitte 3 Jan Seanredam: Plato’s Cave, 1604
2016 Monitor Deloitte
Brexit scenario video
You can find the video here: https://www2.deloitte.com/de/de/pages/strategy/articles/brexit-szenarioanalyse.html
2016 Monitor Deloitte
Brexit scenario recap
A.Back to Square One
› EU breaks up; former members keep liberal relationships
› Free movement of people abolished
› Fall of the Euro leads to currency competition
› More varied, and often stricter, product standards
› Trade rules are dictated by others
B. European Federation
› EU sustained as an economic and monetary union
› Economic and political integration reinforced
› Liberal trade relationships are maintained with the UK
› Movement of people between the EU and UK limited
› UK contribution to the EU budget for access to single market
C. Fortress Europe
› EU is sustained as an economic and monetary union
› Political integration towards a transfer union
› Protective trade policies
› Rise in transaction cost, export nations suffer
› UK-based companies move to continental Europe
D. Shattered Dream
› EU and Euro have fallen
› Former EU member states introduce protective trade policies
› Free movement of people and workers is discontinued
› Customs and non-tariff trade barriers complicate trade
› Emphasis on bilateral free trade agreements
Relationship to UK
Futu
re o
f EU
Integration
Disintegration
Protectionism Free market
2016 Monitor Deloitte 6
Cut trough complexity
2016 Monitor Deloitte 6 Giovanni Panini: Alexander the Great cutting the Gordian Knot, 1718
2016 Monitor Deloitte
Brexit risk map
Demand
Risk
Market Access
Risk
Operational
Risk
Innovation
Risk
Purchasing
power (PP) &
GDP growth
Exchange rate
& market
prices
Free
movement of
goods
Freedom to
provide
services
Free
movement of
people
Free
movement of
capital
Public
tendering
R&D support &
subsidies IP protection
› EUR-GBP convergence and GDP
change increase EU and
decrease UK PP
› Exchange rate and market price
volatility increase uncertainty
› Impact on investments, trade
and demand
› Protective trade policies and
increasing regulatory divergence
restrict market access and
trade, increasing transaction
costs
› Impact on value chains, product
portfolios and customer groups
› Diverging national labor laws
limit access to talent and
movement of workers
› Restricted capital movement
hinders cross-border operations,
investments and partnerships
› Reduced EU budget and changes to eligibility
criteria impact the number and size of subsidies
› Increasing divergence of national laws endangers
patents, trademarks, copyrights, trade secrets and
intangible assets
› Impact on location strategy and business and
economic growth
Demand
Risk
Market Access
Risk
Operational
Risk
Significant impact on:
› Fast-moving consumer goods
› Tourism
› Real estate
Significant impact on:
› Financial services
› Energy and utilities
› Equipment
› Automotive
Significant impact on:
› Multi-national corporations
Significant impact on:
› Pharmaceuticals
› Start-ups
2016 Monitor Deloitte
Brexit impact – Fast-moving consumer goods vs. financial services
130
140
120
110
0
80
70
100
90
01.09.2016 01.11.2016 01.03.2016 01.05.2016 01.01.2016 01.07.2016
Marks & Spencer
Unilever Dow Jones Personal & Household Goods Titans 30 Index
Beiersdorf
Share
develo
pm
ent,
% n
orm
alized
120
01.09.2016
130
140
110
70
80
01.03.2016
100
01.07.2016 01.01.2016
90
01.11.2016 01.05.2016
0
Share
develo
pm
ent,
% n
orm
alized
Prudential Barclays NASDAQ Financial 100
Allianz
Fast moving consumer goods Financial service providers
Sources: OnVista, Yahoo Finance
2016 Monitor Deloitte
Scenario-specific risks and opportunity profiles
Risk Type Impact Short-term Mid-term Long-term
Demand Risks
-- › UK: Exports increase. Imports decrease. Initial uncertainty stops FDI and cross-
border business initiatives, offsetting short-term gains. As uncertainty is reduced, investments grow and benefits materialize.
› EU: Exports decrease. Imports increase. As export slumps are offset by new or strengthened continental European trade relationships, initial negative effects are reversed.
-
±
+
++
Market Access Risks
--
› UK & EU: The status quo is sustained until Brexit negotiations have been concluded. The EU and UK agree on liberal trade relationships to ensure free movement of goods and the freedom to provide services so that market access remains unchanged.
-
±
+
++
Operational Risks
-- › UK: The status quo is maintained until Brexit negotiations are concluded. Despite free trade, the UK discontinues free movement of people, significantly restricting its access to talent. In the long-term the UK is likely to absorb part of the risk
› EU: The status quo is maintained until Brexit negotiations are concluded. Despite free trade, the UK discontinues free movement of people. In the mid-term, European businesses realign recruiting and staffing of European employees in the UK, which they are likely to achieve in the long-term, offsetting negative impacts.
-
±
+
++
Innovation Risks
-- › UK: The status quo is maintained until Brexit negotiations are concluded. Though
staying part of the EU’s common market, it is likely that some EU subsidies for the UK will be reduced or completely discontinued.
› EU: As the EU continues to exist as an economic and monetary union, regulatory divergences between the UK and EU remain small and the UK continues to contribute to the EU budget, innovation risk is unlikely to impact the EU.
-
±
+
++
Scenario B – European Federation (EU integration; Free market)
EU
Short-term: Today | Mid-term: 2-3 years | Long-term: 5-10 years
Continental European Perspective UK Perspective
UK
UK
EU
EU
EU
UK
UK
EU
EU
UK UK
-- Big Risk to ++ Big Opportunity
EU UK
UK UK
EU EU
2016 Monitor Deloitte 10
Choose your strategic position
2016 Monitor Deloitte 10 Statue of Leonidas at the Pass of Thermopylae
2016 Monitor Deloitte
Strategy is a set of consistent choices
› Customers
› Consumer segments
› Target Industries
› Product and service range
› Geographic footprint
› Value proposition
› Competitive advantage
› Profit models
› Partnerships
› Organization and capabilities
› Asset configuration
› Sales and distribution configuration
› Purpose
› Financial objectives
› Non-financial objectives
Goals & Aspirations Where to play
How to win How to configure
2016 Monitor Deloitte
Strategic options concerning competitive positioning
Goals & Aspirations Where to play
How to win How to configure
Brexit impact
› Demand risks
Currency risks
Demand risks
› Market access risks
EU passport
EU free trade agreements with non-EU countries
› Political and regulatory risks
Increasing regulatory divergence between EU and UK laws
Reduction or discontinuation of subsidies
Strategic options
› Portfolio management
Reassess target markets and customer segments
Reevaluate value chain positioning
Realign product and service portfolios
› Engage in industry-specific lobbying (e.g. equivalence regime)
2016 Monitor Deloitte
Goals & Aspirations Where to play
How to win How to configure
Strategic options concerning the value proposition
Brexit impact
› Political and regulatory risks
Consumer protection rules
Data transfer and protection
Liquidity requirements, stress testing
› Market access risks
Partnerships with other FSI players or distribution channels
› Innovation risks
Access to R&D funding
Access to strategic talent
Strategic options
› Reevaluate revenue streams and profit model
› Review value proposition
› Review industrial partnerships
› Consider strategic relocation
› Race to the top vs. race to the bottom regarding regulatory standards
2016 Monitor Deloitte
Goals & Aspirations Where to play
How to win How to configure
Strategic options concerning operations
Brexit impact
› Political and regulatory risks
Consumer preferences and expectations
Data transfer and protection rules
› Market access risks
Access to operational talent
Movement of staff
Reduction / discontinuation of EU / DE subsidies
Strategic options
› Currency or price hedging
› Register with the ESMA / obtain licenses in relevant jurisdictions
› Establish authorized branches / subsidiaries
› Adjust HR model
› Adjust control and reporting systems
2016 Monitor Deloitte
Strategic priorities
Mitigate, assess, prepare
› Hedge currency and/or prices
› Determine business lines dependent on EU passporting and existence of equivalence regime
› Register with the ESMA to retain access to professional clients
› Obtain licenses in relevant jurisdictions in case of refused equivalence status
› Engage in industry-specific lobbying, e.g. equivalence regime, immigration policy, data protection, support schemes
› Prepare for strategic relocation or establishment of authorized branches / subsidiaries to retain access to retail clients
Transform
› Diversify business model, e.g. products and services, fin-tech, shadow banking
Re-position
› Execute strategic relocation / establish authorized branches / subsidiaries
› Portfolio management
Reassess target markets and customer segments
Reevaluate industry and value chain positioning
Realign product and service portfolios
› Realign value proposition (comprehensive service vs. increased focus)
› Reevaluate revenue streams and profit model
› Redesign HR model
› Establish alternative partnerships
Today 2020 2018
2016 Monitor Deloitte
1
2
3
Robust vision of the future
Clarity on risks and opportunities
Alignment on strategic measures
Brexit – a great opportunity
2016 Monitor Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/de/UeberUns for a more detailed description of DTTL and its member firms.
Deloitte provides audit, tax, financial advisory and consulting services to public and private clients spanning multiple industries; legal advisory services in Germany are provided by Deloitte Legal. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 225,000 professionals are committed to making an impact that matters.
This presentation contains general information only, and none of Deloitte Consulting GmbH or Deloitte Touche Tohmatsu Limited (“DTTL”), any of DTTL’s member firms, or any of the foregoing’s affiliates (collectively, the “Deloitte Network”) are, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. In particular this presentation cannot be used as a substitute for such professional advice. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation.
Deloitte 2016