Thursday, May 3, 2012

Cost Cutting or Restructuring?

I heard the silliest argument on CNBC today asking whether a company is engaged in "cost cutting" or "restructuring".  What the heck is the difference you ask?  A person went on to explain a convoluted explanation when, in fact, they are one and the same thing:  Cost Management.

Cost management is to continually look for the most efficient manner in getting products or services to market.  It is that simple.. You get more units of output for every unit of input.  Whether that input be capital or labor it does not matter in the financial equation.

Further, every company should always be doing this.  It is, in fact, why you are in business and why you "add value" and how you gain competitive advantage.

So, let's stop the silly arguments of what we call it, realize it for what it is and move on.  I could have saved CNBC 5 minutes of their silly showtime.

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