What is cost control and cost reduction?

how is it practiced in various industriesWhat is cost control and cost reduction?
Cost control is exactly what it sounds like. Trying to find a scientific management technique to control and reduce the costs of doing business. It is more of a activity than a theory.





In general, businesses try to reduce their overall cost of doing business. Retail stores might try to minimize the cost of wholesale spending (buying the stuff they sell). Wal-Mart does a very good job of this by being the largest retailer in the world. This gives them leverage to demand lower prices.





Other companies do things different ways. If you look at manufacturing, the number one cost is usually raw materials, so they try to sign long-term supply contracts to keep prices manageable (if they think prices will rise, that is).





Other manufacturing companies try to limit costs by paying lower wages (the auto industry is doing this very well by moving their assembly plants to Mexico where the wages are substantially lower).





High tech industries have their highest costs in their skilled workers (computer programmers etc.). In order to minimize costs they DO NOT cut wages, they would loose all of their good employees. Instead, they focus in retaining the workers they already have, saving themselves the expense of training someone new from scratch. This means flexible work hours, strong benefits packages, game rooms, relaxed atmosphere etc. for the workers.





So to sum up, every industry does it totally different than any other industry. Even different companies in the same industry do different things based on their management philosophies, and economic constraints. It really depends on what their most controllable expense is, and what power they have over it.





Hope this helps, good luck!