Activity Based Profit Management                                                          31/07/2004

Cost reduction for competitive advantage

For many organizations cost reduction activity is often undertaken only as a reactive measure to external pressures. Rarely is it considered a part of ongoing business strategy and certainly not part of core growth strategy. However, those organizations who have made that switch in mindset from reactive cost projects to continuous pro-active cost reduction are those most likely to succeed in both downturns and upturns of the economy. Linking ongoing cost efficiency to profit generation by applying methodologies such as Activity Based Profit Management is one example of a strategy for delivering competitive advantage through cost management. This article examines the application of this framework for linking costs to profit-generating activities.

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