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Managing overhead costs
Executives often treat cost reduction programs as one-time efforts to compensate for a bad quarter or a delayed product launch. These short-term programs tend to fizzle out quickly when leaders lose interest or a return to healthy sales growth frees them from cost constraints. But rising competitive pressures should compel companies to manage their overhead costs in a more rigorous and ongoing way that entails curbing internal demand before trying to improve the efficiency of overhead processes.
The take-away: As cost-management programs become a prerequisite for corporate survival, managers must effect a permanent transformation that embeds scrutiny and guards against slippage.
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