How business can become fighting fit
What steps to take?
Key business objective is to improve the performance. Give more importance to immediate and long term focus on reducing costs. It is the foremost and important topic and agenda of leaders of almost all business firms. It requires open mindedness to revisit those areas or operations of the business which neglected scrutiny. At the same time leaders are forced to maintain equilibrium in performance and cost reduction for better result. It is important to ask the questions like, Is the analysis deep enough? Is the current scope broad enough? Is the operations delivering enough results? etc.
Tough time calls for tough measures. At the same time make sure it produces positive results. It is important to not only look for survival, but also take advantage of the opportunities that might arise. It requires renewed motivation to lead the business effective and profitable.
Current Business Scenario
For the last 12 months, many business firms have forced to make significant decisions to adapt unprecedented trading conditions and implement step-change strategies that would never conceived during the easy credit boom years.
Not all business are currently in a state of stress. Industries like biotech and other companies have reported profitability in the past year. In the current business condition requires decisive and nimble management action. Some companies, in terms of profitability, turning to downward and others are in serious trouble or even insolvent. The business scenario is changing constantly and making impact on business firms and its future. This also provide opportunities for the vigilant business man. Insolvency of a competitor gives opportunity to acquire their prime real estate or recruit their experienced staff or take the mantle of the market leader. At the same time losing a customer could be a decisive blow to the existing business. It will create unwanted inventory and low sales which leading to valuable cash being tied up. It will prevent investment in other profitable business or in new products.
Performance of almost all business firms are in the down turn and there is no room in the boardroom for satisfaction. Now a days boardrooms are busier than it has probably ever been.
Reaping the benefits and avoiding the risks
Some or all of the following significant and positive change were successfully implemented by companies which have successfully undertaken cost reduction and performance improvement.
Improved integration of IT service from strategy planning to ground level operations.
Reduced or rebalanced management cost
Reduced or rebalanced operational cost
Reduced or rebalanced infrastructure cost.
Reduced or rebalanced security and control cost
Optimizing tax liabilities and cost effective tax function
Revenue leakage reduction
Improved supply chain management
Improvement in manufacturing process
Better return on investments
There is potential downside to the above initiatives. While reducing cost and improving performance, it is important to look for improved effectiveness of the business. By focusing on employee benefits, IT, headcount and real estate an organization can reduce cost and improve performance. At the same time one has to carefully consider the changes in the effectiveness of the business. A rationalization of IT results in increased work-arounds. At the same time increased IT services can reduce the head count.
Short term investment by reducing spend will result in growth. Cutbacks in R & D and marketing will result in reduced opportunity that may arise in the future. A competitor ceasing to trade is an opportunity. Improved marketing and sales team is required to capture the market of the competitor. Reducing manpower may adversely affect in such scenario. Calculated risk taking is essential in business to computer the market.
It is important to take measures to performance improvement and cost reduction, without sacrificing the long-term interest of the business.