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Cutting Costs Without Cutting Competitive AdvantagesCutting costs is painful - especially when it includes firing employees that have done nothing wrong. However, when cutting costs are necessary because of marketplace realities or because of past mistakes, how costs are cut is very important, and often the process used is less than optimal causing more harm than necessary. In a pseudo effort to be "fair" many executives that cut costs will cut equally across the organization. To be more successful, if cuts are truly necessary, it would be far more strategically sound to cut more resources from one area versus another based upon industry attractiveness, a firm's competitive position in that business, and the marginal contribution a particular activity to creating and sustaining long-term competitive advantage (long-term profitability). Additionally, cutting costs can be achieved via gains in productivity and decreases in waste and errors (using, for example, Sigma Six methodologies). Using an outside consultant can often help to cut costs and reallocate resources for superior returns because an outsider can be objective and take all necessary political arrows for changing the status quo. If your company or business unit is operating today without a clear understanding of your industry and a clear business plan to cut costs and maximize resources, please call now because this is what Alan Michaels does best. For fast assistance, Contact Alan Michaels. |
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