Cut costs without damaging morale & customer service
Canadians had expected their nation's economy to pick up in 2013, but that did not happen.
According to TD Bank, it is estimated that the Canadian economy will grow at a rate of 2.3 percent this year, which will be just 0.6 percent faster than last year, and it will only return to a healthy state in the middle or end of 2015.
In order to survive the tough times, many Canadian businesses have implemented a variety of cost-reduction strategies to remain profitable or reduce losses.
Some of these strategies have resulted in the compromise of employee morale and customer service, which in turn led to lower productivity and customer satisfaction.
There are a number of companies, however, that managed to cut their budgets with minimal negative impact on the efficiency and profitability of their businesses.
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Unlike many other Canadian companies that have resorted to cutting jobs to save money, Air Canada is trying to reduce its budget by implementing a flight renewal plan.
This cost-reduction strategy also facilitates the international expansion that it is planning to undertake, and it involves the acquisition of 787 Dreamliner and high-density 777 airplanes.
The company expects to save about 30 percent on operating and maintenance costs with the deployment of the 787 Dreamliners, and about 21 percent on unit costs by replacing its current 777 planes with the new high density 777s. It is aiming to lower its overall cost by about 15 percent this year.
Air Canada is a good example of a company that has found a way to expand its operations and cut costs at the same time.
IAMGOLD Corporation is another Canadian company that is getting impressive results from its cost-reduction program.
In March, 2013, the company announced that it was planning to reduce its total cost by $100 million by the end of the year. As of June last year, it managed to achieve about 55 percent of its planned reductions. Although reducing staff requirements was one of its cost-cutting strategies, it relied on many other activities to stay on track to meet its year-end goal.
Some of these activities include lowering power and maintenance costs, reducing the use of consumables, renegotiating mining supply contracts and improving the efficiency of its operations.
Suncor is the largest energy company in Canada in terms of market value, and it is turning to technology to reduce costs.
The company is the first oil-sands mining operator to conduct tests on computer-operated haul trucks. According to experts, these robot trucks can increase productivity and lower fuel and maintenance costs by about 15 percent, and they also eliminate the need for human drivers.
Suncor said that it may replace some of its existing haul trucks with robot trucks over the next five years.
There are many things that Canadian companies can do to lower costs without losing their competitive edge.
They should consider all possible options and devise budget strategies that can make their businesses more profitable both in the short and long run.
About the author
John McMalcolm is a freelance writer who writes on a wide range of subjects, from social media marketing to personal budget planning.
CB Insights: US Insurtechs Compete In A Now Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.