With the proposed referendum in the UK about EU membership, businesses have to perform a thorough analysis in the coming months to understand the impact of Brexit. It is not all about trade barriers and access to a wider market though. There are factors within a business that you can measure using data available in the corporate systems and develop mitigation plans if Brexit is found to have an impact on the financial performance.
Business leaders should be asking the following four questions to get a deeper insight on the potential impact.
Are you going to witness enhanced employee attrition?
With more than 2 million EU nationals in the UK workforce, there is bound to be a disruption if some of those employees decide to move to an employer based in the EU. From a company perspective, do you understand the productivity levels of the employees who could potentially leave? What are the most important attributes of an employee that matters the most to your organisation? Can you quantify the enhanced impact weightage of these factors on the performance? Are you going to lose valuable training provided to these employees who could potentially leave?
How will Brexit impact your customers and market share?
Your products and services may not only have customers in the EU, but also many EU nationals living here in the UK may be your customers. If they leave to pursue their careers somewhere else, it may lead to customer attrition. Do you understand the segmentation of your customers, especially the ones you have acquired in the recent years? What are the demographics of thecustomers who could potentially leave? How much money have you spent to acquire these customers. No customer is alike, so various factors such as customer lifetime value, whether they are a promoter of your brand, their satisfaction levels would have an impact on how will your bottom line be altered by the attrition?
What is the impact on your strategic suppliers from EU?
Given the cross border trade between EU nations, there is a high possibility that your company may be procuring products or services based in EU. While it won’t happen that they would stop supplying in case of Brexit, there is a possibility of currency fluctuations in case of Brexit. That can be an issue with export and import, as it is possible that your supplier may no longer find it economically viable to supply goods and services? If the fluctuation is on the other spectrum, you may find that it is getting expensive to procure from your EU suppliers which would directly impact your bottom line. But as in customers, not all suppliers are alike. You may have to measure the qualitative aspects of a supplier to find out the potential impact.
What about your return on investments in the EU?
Your company may have subsidiaries and joint venture partnerships, implementing large projects, acquired assets or invested in other companies based in the EU. While currency fluctuations will impact the return on investment, so would also be the ability to sell and bring the profits back? Key questions to ask would be around the quality of investments and proportionality to the overall assets.
A comprehensive scenario analysis would help you understand the impact under various circumstances and plan mitigation steps.
What are the key features you should be looking for in such a scenario analysis tool?
1) Is the data model customised to capture all key business factors that would be impacted by Brexit?
2) Are the scenario planning screens comprehensive, but still easy to use? How long would it take to get the solution up and running? Does it require lots of IT engagement causing it to prolong the implementation cycle?
3) Can you easily create, share and persist scenarios?
4) Is the rules engine intelligent enough to convert your data to scenario outcomes that can be easily visualised using dashboards and KPIs?
DataQuarks offers Brexit Analyser solution to help companies analyse the impact of Brexit and plan next course of action.
Want to access our whitepaper on impact of Brexit on a company performance? Get in touch now.