Strategic Cost Reduction
Where do you start?
Business drives results in different ways. There is no “perfect” portfolio of costs or investments. A portfolio that is managed effectively is one that balances short-term and long-term objectives. For your business then, how can you make radical changes in your cost base that will drive business results and portfolio performance?
It’s no wonder that half of the companies that have recently been surveyed indicate that their cost programs did not meet the required objectives. Radical changes to cost structure can be triggered by liquidity and revenue compression, or the desire to free up cash for reinvestments and chase profitable growth. Other factors that drive companies to focus on cost reduction as a strategic priority include growing competitive pressures, market uncertainty and volatility, cautious external borrowing, continued expansion in developing markets, and increasing cost of regulatory and environmental compliance.
As organisations face increased multiple triggers simultaneously, the question becomes:
- Where do you start?
- Where and when should you cut, invest, or do both?