Business Management

Implement A New Strategy For Cost Cutting

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Word Count

1500 words


Business Report


2 Days

Assignment Criteria

This assessment task asks you to address an issue which has occurred within the Brisbane branch of your  organisation. 

The issue has been referred to the Management Group (of which you are a part) of the organisation by  the Chief Executive Officer (CEO). Each member of the group has been tasked with preparing a report  that addresses the issue. When completed the report will be forwarded to the CEO for consideration. 

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Assignment Solution


The aim of the report is to identify the issues, which have been raised by the manager while trying to implement a new strategy for cost-cutting, and as to how to redress those issues with the proper intervention of the management (Barrow, 2010). The report aims to look into the causes of the scepticism and the resistances that have been taking place against such a strategy.

Cost Cutting is basically the method that is utilised by an organization for the reduction in the costs and to gain an increase in the organization profits. The strategies that are drawn up will vary from organization to organization (Bertels, 2003). The cost involved in a company is affected by the decisions taken while developing a certain product.

The strategy that was prepared and implemented for cost-cutting was to replace personnel with developed and cutting edge strategy (Berman, 2005). This strategy has faced some stern opposition from the personnel involved in the company this very plan has been subjected to scepticism also. Subordinates who report to me have also come out to the open to protest against such a strategy. We need to find out a way through mutual discussion among the parties as to how to reduce the costs incurred by the company while maintaining the same employee level and quality of the company (Cost-cutting Web server, 2000).

Defining the Issues

The main issue that has been raised on the recently implemented cost-cutting strategy is over the decision of replacing personnel with advanced technologies. No doubt this would increase the productivity of the organization but as of now, the organization has to face stiff opposition to these strategies.

As per the present practice that is prevalent in the organisation, personnel have been replaced with technology. This process has led to the creation of a class of people who are simply out of the race of contributing to society economically (KIMISHIMA, 2012). This creates agitations and resistances to such managerial systems. Improper communication between the management and the workers also is a reason for such agitations. The present policy is facing such scepticism as it includes cutting off employees from the organization and introducing technology in their place.

Factors that have affected the management to introduce such cost-cutting strategy are:

  • When authorities higher up in the organization wants to increase the profit margin.
  • When the organization is not getting the desired profit as it was planned for in the planning process.
  • Due to miscommunication with the higher authorities, the lower bodies cannot project their ideas to increase business plans but have to adhere to the orders that are passed down from the top.
  • And any other reason for increasing the profit by reducing the cost(Koletar, 2011).

These factors can be external factors or internal factors of the organization that leads up to the task of building such cost-cutting strategies. External factors that normally play a part in such strategies are the present market condition and the demand of the consumer on a product of the organization (Guttentag, 2010). Internal factors that play a major factor in the development of cost-cutting strategies are based on the fact that the organization faces huge costs with respect to the accidents, errors, or any surprise external activity. These factors are collectively known as Operational Risks. If these operation risks could be managed then the effect on reducing personnel can be minimised (McInerney and White, 1995).

Addressing the Issue

It is being considered that laying off people for cutting costs is the biggest mistake by any organization. These layoffs are creating a bunch of citizens who are facing the incapability to provide any economic development to the society. The layoffs have very severe repercussions on the employees and their family (Le Pla, 2009). Thus new plans and strategies need to be formulated for finding ways to stop such agitations, so that cost reduction can be made but at the same time maintain employee satisfaction.

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