Business Two sides of the medal

Increasing costs is perhaps the most discussed topic at meetings with the Directors General of the emerging companies. One of them said that the development of their small company had a profitability of its capital of about 60-80%, and then, when the market share for the company was increased, then administrative expenses, together with commercial expenses, began to grow faster than incomes. The effect of scale will always be affected when the growth of the company increases, for the benefit of it only acts to a certain extent.

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Then there are reductions in costs in terms of the quantity of output. This speaks of further uncontrollable costs, perhaps because executives begin to feel the money in their pockets - they are ruining them.

After these actions, usually costs are reduced, cost control, the main thing to understand, what costs should be reduced, and often not the costs are moving. Investments or unreasonable costs are most often the fault of rising costs in each company. How to divide them? It is important here to take the cost items and relate them to the company's strategies. A global perspective on the employment of company employees may be related to the development and execution of existing procedures. It is important to divide any division into two parts, that is, to divide their budget into the development area and operating area.

Financial processes, logistics, production and sales processes are what affects the organization of the company's operations, which should take into account all of the above. Means from each of the processes also need to be allocated. But for example "piece production" at the enterprise is an exception, it is better to invest all the forces in the project organization of labor here.