Definition of Cost cutting:
Cost cutting refers to measures implemented by a company to reduce its expenses and improve profitability. Cost cutting measures are typically implemented during times of financial distress for a company or during economic downturns. They can also be enacted if a company's management expects profitability issues in the future, where cost cutting can then become part of the business strategy.
Shareholders who seek maximum monetary returns on their investments in a company expect that management will maintain growth in profits. When the business cycle is on an upswing, companies are generally able to generate profit growth. However, on a downswing, profits may fall and if they stay down for prolonged periods, management would feel the pressure from shareholders to cut costs in an effort to prop up the bottom line.
Initiatives that focus on reducing expenses through methods such as lowering salary costs, conserving necessary resources, or consolidating office spaces to decrease facilities expenses in order to improve the financial health of an organization. Cost cutting measures are often employed to keep a business operating through difficult economic periods.
The reduction of costs, especially in a business.
How to use Cost cutting in a sentence?
- When embarking on cost cutting it's important to have a cost cutting strategy that classifies costs as bad costs, good costs, and best costs.
- Cost cutting is a measure taken by a company to reduce its expenses and improve profitability.
- Cost cutting measures can include laying off employees, closing facilities, downsizing offices, and streamlining the supply chain.
- As part of a cost cutting strategy, it's important for a company not to over cut costs, leaving it unprepared for increased demand or in a position where it may incur more costs.
- The company would take a hard look at a new round of cost-cutting.
- When a company is in financial distress or there is an economic downturn is when companies are most likely to enact cost cutting measures.
Meaning of Cost cutting & Cost cutting Definition