Deloitte warns rough and ready cost reduction damages profits and profitability
According to a survey of British companies commissioned by Deloitte, one in four organisations in the FTSE 100 has carried out five or more cost reductions in the previous three years. Deloitte, the business advisory firm, warns that too many businesses damage their ability to achieve greater efficiencies and competitive advantage by cost cutting in fits and starts.
Patrick Doherty, head of cost reduction for the consulting practice at Deloitte, said: “For too many firms cost reduction activity is strictly for the bad times, only to be abandoned as soon business conditions get better. But companies need to think of cost-efficiency as a goal for all seasons.
Most companies say they initiate cost reduction activity because their profits and profitability are below expectations. Another significant spur to cost cutting is mergers and acquisitions (M&A), particularly among larger companies. As M&A activity has increased, so have CRPs designed to capture the synergies that many of the deals are based on.
See full Press Release.
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