Dr. Albert D. Bates
President, Profit Planning Group
Boulder, Colorado.

The sales challenges associated with the recession have caused most firms to take a serious look at their operating expenses. Obviously, most of the effort has focused on cutting ex­penses. While that is an important task, a more fundamental issue is determin­ing the nature of the firm’s expense structure. That is, deciding whether the organization should build a heavy fixed-expense structure or whether it should rely more on variable expenses. 

Examining the expense structure is not an academic issue. The ability to put in place an expense profile that reflects the firm’s strategic posture is essential to long-term success. It also has major impli­cations for the ability of the firm to withstand current and future economic challenges.

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Categories: Technical topics

Tags: Profitability

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