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Thursday, December 3, 2009

5 Cost Leadership Opportunities

Financial leaders must know the business to play a value added role during the ups and downs of the economy. The cost leadership understanding will lead to competitive advantage. Five key areas to identify among others:

  1. Clear cost of product lines. Have specific costs for each product line and understanding of the margins that are delivered to the business.
  2. Focus on core strengths of the business. Review the products in your portfolio and markets. Provide clear definition to optimally shift products and markets.
  3. Sales incentives based on "Top-Line" goals. A shift to margin expectations will lead to a greater return to the shareholder. We get what we incentivize.
  4. High staff turnover. The opportunity cost of employee movement can be estimated at 2-3 times the annual salary plus benefits.
  5. Change adverse and a lack of diversity. The world is global and a diverse outlook is essential to driving past the competition.
Financial Leadership plays a key role in driving a company to profitability. There are numerous signs of cost savings in an organization. You have two ears and one mouth, listen, and move the business forward.
"Keep driving costs out of the business and don't rest - the competition won't!" - Brett Vanderwater, MBA, CIA, CMA, CTP