Cost reduction tactics
- How to reduce costs?: The tools and cost reduction plans that are used by businesses?
- The benefits of a policy of cost reduction
- The limits of cost reduction and proposed alternatives
In today's competitive market, companies are constantly trying to win new customers and new markets in an effort to generate strong profits. They thus opt for new strategies that will enable them to be more competitive and will facilitate cost reduction. The purpose of reducing costs is to guide the company's objectives to the minimization of its total costs. The company is thus required to seek sustainable costing while offering lower prices than those charged by competitors in the same sector.
[...] Cost reduction is also problematic for enterprises, as it includes the right to mortgage the future of the company. Cost reductions may lead to negative consequences in terms of the company's image (the owner of Scoot Papers was nicknamed "Chainsaw" after dismissing 11,000 people). For example, telecom operators have reduced their investments in antennas and have suffered consequences such as a saturated networks and dissatisfied customers. At the same time eco-design, even while it reduces some costs, gives rise to other costs. [...]
[...] The benefits of a policy of cost reduction The first advantage of cost reduction that must be emphasized to the consumers is the competitiveness of the price that businesses are able to offer. For example Axa Bank offers account management fees that are much lower than those of a traditional bank. Furthermore, as labor is cheaper, companies can afford to sell at lower prices. We note that many emerging companies are following the global economic trend of accelerated growth in the next two or three years. [...]