Everyone knows that cutting costs has a direct impact on an organization’s profitability. Few understand, however, that cutting costs also frees up money that can be used in other areas of the business. A dollar saved is a dollar earned.
The million dollar question is why often at the evaluation and control stage of strategy employees of the organization are subjected to experience severe cost cutting effects?
Let’s discuss few definitions and backgrounder of strategic management to derive at conclusions. However there will be few more questions unanswered. 
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It is the process of specifying the organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies and plans to achieve the organization’s objectives. (wikipedia)
“Strategic management is an ongoing process that assesses the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (wikipedia)
All these thoughts lead to define/set only two objectives as CEO to the company 1. Financial objective (EPS, Operating profit, Quarterly profits, cost effective profitability) 2. Target around market share.
The strategy then finally picked is split into planned strategy and adaptive strategy which becomes actual strategy eventually. Prior to all these exercise any company does either Environmental scanning or does some market research background work.
The strategy which is finally picked is ready to be implemented by most effective communication channels which allow the functional heads to implement to get the desired results.
Here are few un-answered questions:-
1. The employees at the bottom of the pyramid have never contributed to making of strategy.
2. No upward feedback is used while devising a strategy.
3. Employees never know the indicators which affect EPS, Operating profit, Market share.
4. Majority of times employees at the bottom of the pyramid are subjected to Manager Harassment than leadership cover.
5. Operational traits are injected in employee community than leadership traits.
6. Most often managing up is not encouraged by managers at all.
7. Often we see managers take pride in explaining the lowest level of its employee band that there is a serious cost cutting etc.
There might me few studies to answer these questions, I might as well do the same cost cutting methods if I become CEO or COO to show up my Q4 results.
2 Comments
January 18, 2009 at 6:19 am
thanx sir,
it is gr8 article for our knowledge………..
January 29, 2009 at 3:46 am
mrng sir, its really a nice article