What are some ways other than just reducing payroll that man

What are some ways, other than just reducing payroll, that managers can use to cut costs? What do they need to be aware of when trying to determine an approach to staying competitive?

Solution

Even though the traditional cost-cutting method has remained job cuts, the following measures are also used to cut costs.

(1) Reduction of travel expenses is a widely used method to cut costs. In fact, when a corporate firm enters stressful period, the first expense that is reduced is travel, and not payroll.

(2) Incidental expenses are also curtailed and their budget is lowered.

(3) Almost widely adopted approach is to transform the support services using automation. However, the more automated the process, the more likely it is for lower demand for workforce. So automation is often associated with job cuts.

(4) A novel way to cut costs is innovation. Even though innovation involves huge investment thus raising current expenses, benefits from the innovation are spread across future years in form of lower production cost.

This brings home a very important point about which approach to decide upon, to keep costs controlled and performance, competitive. Instead of myopic focus on solely short run performance and investment opportunities, managers should look upon the broader time horizon in terms of medium to long run opportunities and expansion scopes available to the firm. In the constantly changing competitive world, competitiveness doesn\'t refer to current level of survival, but to future ability to remain a healthy player in market.