What Price Cost Cutting? by Mike Powell and Justin Craig
Australian Center for Family Business, Bond University, Australia
In recent years, many family businesses have turned to cost cutting practices in order to become more efficient and stay competitive. Cost cutting is often introduced as a survival strategy that is forced upon the company in tough times and, as well as influencing the day-to-day operations of the business, may affect long-term viability.
Reducing, or at least controlling, costs and increasing productivity are at the core of management.Problems arise when family businesses look to these concepts to make strategic decisions.Decision makers can become so preoccupied with the idea of producing effectively and efficiently that they lose sight of what it is they are producing and in what direction the firm is truly headed.A company will lose sight of its vision if it only focuses on achieving short-term goals with no respect to future aspirations (Trott, Paul. 1998, Growing Businesses by Generating Genuine Business Opportunities: a Review of Recent Thinking. University of Portsmouth Business School). More…