General Motors terminated half of their workforce in order to reduce some of their operating costs. Based on some professional experiences provide examples of how an organization might reduce their operating costs?
What are some ways in which an organization can lower their operational costs?
REDUCING OPERATING COSTS
Operating costs are those expenses related to marketing or distributing the product and service and those incurred in administering the business (Keown, 2002). As reflected in the company's income statement, they are termed as selling, general, and administrative expenses. They are often times referred to as expenditures in relation to the day-to-day operations of the business.
Operating costs are either fixed or variable. Fixed expenses are those that remain the same regardless of the products produced while variable expenses are those that vary according to the products produced ( http: //www.investopedia.com).
Fixed operating costs are incurred on a regular basis (e.g. monthly). An example is the monthly salaries paid to employees. As such, they could hardly be reduced in the short-term. A company cannot just terminate employees without valid cause. Otherwise, the company may be faced with labour charges. In ...
Systems operations management for General Motors is examined. Some of the ways in which an organization can lower their operational costs are provided.