Bank of America is the second largest bank in the United States but is currently facing many financial hardships. Under a new CEO since 2010, “Brian Moynihan has been working to streamline and reduce risk at a company that has lagged rivals in recovering from the financial crisis, largely due to mortgage-related losses” (Huffington Post). His plans are meant to eliminate roughly $5 billion in annual expenses and 30,000 jobs (Huffington Post).
After learning about the different ways managers can improve their bottom-line, it was interesting to digress on the situation that is going on at Bank of America. There are three major ways a company can look to improve during a financial hardship. They can look to marketing to increase sales, they can look to finance and accounting to cut expenses or they can turn to operations management and cut production costs.
In this case, Bank of American took the route of finance and accounting by making VERY drastic spending cuts. Was Bank of America smart in doing this? From a marketing perspective, with such a difficult and lackluster economy, increasing sales is probably not the most feasible option. From an operations management perspective, it is a service based company and therefore it would be difficult to cut operational costs. BofA could increase efficiency by closing certain branches or shortening the work hours, however this would be at the cost of its employees. As such, in this type of economy, job layoffs are a way to jump-start the company back to life. It is by no means the popular choice, but really seems to be the best option at this point in time.
Any thoughts, comments or rebuttals?