Reducing Expenses: Short vs. Long Term Consequences


Reducing Expenses: Short vs. Long Term Consequences

The difficulty of expense cuts lies in weighing their immediate benefits against possible long-range disadvantages. For example, we earlier discussed the costs associated with obtaining and protecting patents. Certainly, we would have better short-term results by not spending the money to pursue this strategy; however, the long-term effect on our business would be to reduce all of our margins in the future as our product categories became more competitive. Before entertaining this expense-cutting option, one must be certain of the importance of the short-term gain. If you are running an efficient operation, cutting enough expense to generate a significant profit improvement is problematic at best. Of course, if expense cutting is necessary due to poorer than expected results, the first cuts should probably be in executive compensation. After all, if results are less than expected, one can generally look to the leadership to understand why. In this regard, paying executives bonuses in years of less-than - stellar results is a shameful example of totally wasted money.




Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy
Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy
ISBN: N/A
EAN: N/A
Year: 2004
Pages: 130

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