Case_In_Point_7th_Edition_Page001_183_2

+ Ways tJ Cut CJsts
Many case Kuestions will ask you to come up with ways to cut costs, and it has Leen my experience that
students tend to struggle with this reKuest. A elow are numerous ways to cut costs in the areas of laLor,
production and finance. Memorize them and when they ask you, rattle off two or three in each area.
A efore you answer, the McKinsey Quarterly* reminds us to consider the company’s strategic needs and
to think aLout the long-term conseKuences under a range of various economic scenarios. Do these
areas ) xive r value” and do they help make the company ) competitively distinctive”? Don’t just cut eKually
across the Loard.
paMNr
V . oss-train C r workers.
2 . ut Covertime.
3 . educe R employer 4 0 k) V or ( 4 0 3 match. ( b )
4 . aise R employee contriLution to health-care premium.
O. Institute four V 0hour z days instead of five eight-hour days.
6. Convert workers into owners (if they have a stake in the company they will work longer, and harder
and constantly think of ways to cut costs in a way that they might not have done Lefore).
7. Contemplate layoffs.
8. Institute across-the-Loard pay decreases.
: 2NouctPNr
V . nvest I in technology.
2 . onsolidate C production space to gain scale and create accountaLility.
3 . eate C r flexiLle production lines.
4 . educe R inventories (JI T).
O. Outsource.
6. R enegotiate with suppliers.
7. Consolidate suppliers.
8. Import parts.
A Parcd
r
V . ave H customers pay sooner.
2 . efinance R your deLt.
3 . ell S nonessential assets.
4 . edge H currency rates.
O. R edesign health insurance.