Design Con 2015

Cost-Cutting Is No Panacea for High-Tech Growth

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mfbertozzi
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Supply Network Guru
Re: Cost cutting - products' quality
mfbertozzi   11/26/2012 2:39:31 AM
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@MrRoques: great analysis, products' quality is a key point for planning a good recovery of the company, but it requires from top manangement a clear strategy; on RIM, for example, EBN community has discussed a lot about and till now it seems recovery's path didn't achieve positive results.

Mr. Roques
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Re: Cost cutting is prudent step
Mr. Roques   11/25/2012 4:52:44 PM
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I have to agree with you. If companies are trying to get "green numbers" by reducing costs instead of increasing revenues, they are doing something wrong. 

RIM, Nokia, HP are not doing bad because their costs are high, but because their products don't compare to the leading products. 

mfbertozzi
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Re: Cost cutting is prudent step
mfbertozzi   11/24/2012 8:22:51 AM
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Well, it is a crucial question to answer properly. That said, in case I would try to make a long story short, I believe right steps to consider from top managers are: 1) who we are, 2) where we are in terms of business/market position, 3) where we would like to be in X months from now 4) what should be a credible plan  - based on 1st step - for doing that, including trends' from competitors. After that, I would say that salary's reduction sounds good in case it is a part of the above summarized approach and plan, sounds bad if performed as "stand-alone" action.

tech4people
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Re: Cost cutting is prudent step
tech4people   11/23/2012 8:38:54 AM
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Mfb,

What is a better solution?

I prefer keeping employees on the Company roster[With reduced Salaries];atleast until they find a new job.

In the event they don't find a new job immediately;atleast they have something to fallback on temporarily.

Also the Company manages to hold onto that expertise (instead of retraining someone new from Scratch when demand picks up).

What do you think?

Regards

Ashish.

 

mfbertozzi
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Supply Network Guru
Re: Cost cutting is prudent step
mfbertozzi   11/23/2012 8:30:16 AM
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Thanks Ashish, your post fits very well what happened and is happining for several tech companies (big, medium or small, it doesn't matter); in my opinion, current financial crisis is still present (partly) for a lack of vision in making good strategy from managers, then the only way for trying to preserve the economics of the company is cutting jobs. But it is only a "stand-alone" approach that brings very limited benefit in the present and neither else in the future.

tech4people
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Re: Cost cutting is prudent step
tech4people   11/22/2012 1:12:50 PM
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Bolaji,

What are you basically referring to is the exponential function of Growth.

Yes,it cannot and will not be maintained consistently forever.

Reversion to Mean is a difficult process to handle but has to be expected after unbelievable growth for the longest period of time.

Regards

Ashish.

Bolaji Ojo
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Blogger
Re: Cost cutting is prudent step
Bolaji Ojo   11/22/2012 12:50:09 PM
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The other problem we face is that companies are expected to grow at double-digit rate each year. I don't know how that can be possible in any industry and in any economy but it's expected and companies are forcing themselves to deliver on it.

tech4people
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Supply Network Guru
Re: Cost cutting is prudent step
tech4people   11/22/2012 5:32:27 AM
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Nicole,

Very true! Unfortunately Short-termism rules on Wall Street today!!!

Regards

Ashish.

tech4people
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Supply Network Guru
Re: Cost cutting is prudent step
tech4people   11/22/2012 5:30:22 AM
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Mfb,

Could'nt agree more with you. Blindly cutting costs is no solution for what Ails the High-tech industry today.

Especially once we realize that the Biggest problem they face is a lack of demand because most consumers in the West are already over-saturated with Electronic Gizmos today.

And if it were'nt for cheap credit available from Central Banks(and super-low interest rates);they would not have been able to sell half as me Gizmos as they have sold so far.

Get used to it folks-Demand has permanently cratered in the Over-indebted west!!!

Regards

Ashish.

tech4people
User Rank
Supply Network Guru
50 Billion in Cost Cuts!!! You gotta be joking!!!
tech4people   11/22/2012 5:19:13 AM
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Nicole,

For comparison and reference sake can you please supply us with the following two pieces of Information-

1)Total Marketcap of the High-tech sector today &

2)Total Annual sales of the entire High-tech sector today.

50 Billion Dollars is a Huge amount of Money for the entire world economy to lose in a stretch and just for the High-tech Industry it will be catastrophic!!!

The High-tech industry as we know it will no longer exist if this cuts become reality.

As for adopting an Asset light model-This consultants belong in the dustbin of history today.

More and more companies are choosing to bring back IT in-house[Like GM];similarly many other firms are adopting similar criteria.

I am sure you also must have heard that Onshoring is picking up massive steam today primarily because cost differential(with low cost alternatives is narrowing considerably) and also you can get skilled professionals easily in the US today.

To summarize I think this Report is all a bunch of over the top Nonsense and should not be given any traction.

Regards

Ashish.

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