Accounting_project[1 - Effective Methods of Reducing Costs in an Economic Crisis By 3:30-5:00 Group 6 Nick Coates Michelle Estrada Kimberly

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Effective Methods of Reducing Costs in an Economic Crisis By: 3:30-5:00 Group 6 Nick Coates Michelle Estrada Kimberly Kauffman Nick Navarro Joshua Tillis
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Cost Reduction Approaches Companies can reduce costs by : Cutting expendable jobs Pros : Could allow companies to identify and remove unnecessary jobs, thus cutting costs and removing inefficiencies Cons : Might decrease employee morale as they face the threat of being laid off; Remaining employees might have to work more to pick up the slack of those who were laid off Example(s) : Google recently restructured their employee structure by cutting redundant jobs built up during years of rapid growth. 1 The San Francisco Chronicle cut staffers as a way of reducing inefficiency in its production process. 2 Reducing employee salaries Pros : Alternative to job cuts/layoffs Cons : Employees have to deal with less salary Example(s) : HP plans to reduce executives’ pay by 10% to 15% and employee pay by 5%. Decreasing levels of inventories Pros : Companies can cut operation costs due to their decreased inventory Cons : There will be a significant restructuring cost for companies rearranging their reduced amount of assets Example(s) : Since Alcoa has decided to cut 135,000 metric tons per year from their inventory, they will cut operation costs by $150 million per year, but will suffer a $900 million restructuring cost. 5 Off-shoring Pros : Companies can reduce costs by paying offshore employees less money for the same jobs Cons : Loss of American jobs; Does not help the American economy Example(s) : IBM sent out layoff notices to 4,600 employees in January and plans on laying off about another 5,000 in the coming months.
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Cost Reduction Approaches (Continued) Not matching 401K plans Pros: Companies save money
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This note was uploaded on 03/30/2010 for the course CH 369 taught by Professor Kbrowning during the Spring '07 term at University of Texas at Austin.

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Accounting_project[1 - Effective Methods of Reducing Costs in an Economic Crisis By 3:30-5:00 Group 6 Nick Coates Michelle Estrada Kimberly

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