COST REDUCTION STRUGGLES IN SISTER COMPANIES

Year 2018, Volume: 7 Issue: 1, 11 - 17, 01.09.2018

Burcu Birol

https://doi.org/10.17261/Pressacademia.2018.849

Abstract

Purpose- Cost is always in top ranking issues from corporations to small enterprises. In order to accomplish cost reduction goals, the structure of cost must be well defined. What does cost reduction really mean, and why close follow up for cost items are needed should be the main questions of cost projects. This paper discusses the cost reduction concept, and its techniques, and develops a point of view for the sister companies. Intercompany transactions have many opportunities to utilize, and sister companies can be benefited from common functions.

Methodology- A systematic literature review is performed in this study in order to present the concept itself, and a conceptual type of study is followed for discussing cost reduction methodologies in sister companies.

Findings- According to findings of the study, especially for manufacturing sister companies, there are some opportunities for cost reduction as taking the advantage of organization structure, re-organizing the support functions, volume impact in fixed costs, increased bargaining power in purchasing function, and peer learning behaviors in quality and R&D activities.

Conclusion- Sister companies gain the favor of intercompany transactions in cost reduction issues, and are creating synergy for the total success.

Keywords

Cost control, cost reduction, sister companies, manufacturing companies, intercompany transactions

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