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Casing: Business Strategies - Coggle Diagram
Casing: Business Strategies
Profitability
Cost containment
Goal: protect margins
Reduce unessecary spending:
Travel & entertainment, events
often the first area to cut during a downturn because it’s easy to scale back quickly without major disruption
Contractor & Temporary Staff:
End or reduce freelance/consulting contracts / Pause hiring or onboarding of short-term workers / Reallocate work to existing staff
Lower overhead
real estate, back office functions
Internal Operations Optimization
: Automation, streamline processes
Vendor & Supplier Negotiations
: Renegotiate payment terms or contract rates / Pause non-essential service contracts / Bundle services for better pricing
! Hard to change fixed costs in the short term
- long term contracts, damage morale, requests planning and renegociating
Employee layoff
Last resort but can be justified when: (1) the
demand is down long term
so the company does not need the same workforce / (2) in
consulting
a lot of consultant are on the bench for too long / (3) the company shifts their
business model
/ (4) after a
mergers
, they may be duplicate roles
Need to consider if the employees are
unionized
or employed in
long term contracts
Analysis before cutting because it is a hard and emotional route
: (1) Back up decision with
data
to show justification / (2)
Avoid cross border reduction
, it shows a lack of strategic thinking and can weaken high performance areas / (3) work with
business manager
to make collaborative decisions
Steps to take to ensure a smooth process:
(1) Communicate with CFO and Investor Relations to
not trigger concerns in the financial market
, make sure that the layoffs are seen as a strategic approach rather than a panic move / (2) Be
transparent with internal stakeholders
, people accept more when they understand why / (3)
Align with C suite
When to focus on cost vs revenues
when revenues are falling due to macro economics reasons --> focus on costs as we can control it
then it is important to
protect margins
Decline in revenues
Lower Volume
Lower market demand
Loss of market share
Poor distribution, the customers can't access the product
Product issue
Lower Price
Competitive price wars
frequent discounts
Lower value product mix (customers are choosing cheaper products)
Pricing strategy not aligned with their customers' willingness to pay
Customer mix shift (High value customers are leaving, new customers are spending less, revenue shifts towards lower margin channels)
Inflation :question:
Price problem when: inflation causes prices to rise, then customers stop buying,
Operations
Distribution
Underserved areas or delays
Open regional hubs, data driven demand mapping
Inefficient logistics
Automation, real time shipment tracking, predictive analysis
some channels are overstocked and others understocked
Use centralised tool, demand forecasting, flexible shipment
Third party partners are unreliable
Set KPIs for partner performance
High distribution costs
Change shipping routes, negotiate volume discounts,
Market demand are high but sales are low --> distribution problem
Inventory losses
Theft
CCTV, anti theft protocol
Poor inventory tracking
Automated inventory management
Damaged goods
Training, packaging
Expired products
FIFO, demand forecasting,
Misplaced or Miscounted inventory
Barcode, clear labelling system
Supplier or receiving errors
Quality checks by receivers